Holding

The contract‑labour agreement was genuine, not a sham; there was no violation of Section 9A, and without a Section 10 notification the workers are not entitled to absorption, so the High Court’s interference with the tribunal award was improper.

Summary

The International Airport Authority of India (IAAI) terminated a licence with a private ground‑handling firm, after which the firm’s workers formed a cooperative society and entered into a contract‑labour agreement with IAAI. The workers later sought absorption as regular employees, alleging that the contract was a sham, that IAAI violated Section 9A of the Industrial Disputes Act by changing their status, and that they were entitled to absorption in the absence of a Section 10 notification under the Contract Labour (Regulation and Abolition) Act. The Industrial Tribunal ordered their absorption, but the High Court set aside the award, holding the contract genuine and the workers not entitled to absorption; the Supreme Court reversed the High Court, restoring the Single Judge’s order. The Court held that the contract was not a sham, there was no breach of Section 9A, and without a Section 10 notification the workers could not claim absorption, and that writ courts cannot interfere with tribunal findings absent lack of evidence. Consequently, the appeal was allowed in part, the Division Bench’s order was set aside, and the Single Judge’s order restored.

Issues considered

Whether the contract‑labour agreement between IAAI and the workers' cooperative society was sham or nominal, making the workers direct employees of IAAI.
Whether the conversion of the workers from direct casual labour to contract labour violated Section 9A of the Industrial Disputes Act, 1947.
Whether, in the absence of a notification under Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970, the contract labour are entitled to absorption by the principal employer.
Whether a High Court, exercising writ jurisdiction under Article 226, can interfere with the award of an industrial tribunal on the ground of insufficient or non‑credible material.

Legislation cited

Constitution of Indias. Article 226
Contract Labour (Regulation and Abolition) Act, 1970s. 10, s. 7
Industrial Disputes Act, 1947s. 2(k), s. 9A

Subjects

contract labourabsorptionSection 9ASection 10industrial tribunal awardwrit jurisdictionsham contractco‑operative societycargo handlingIAAI

Judgment

[2009] 8 S.C.R. 1

INTERNATIONAL AIRPORT AUTHORITY OF INDIA A
v.
INTERNATIONAL A!R CARGO WORKERS' UNION & ANR.
(Civil Appeal No. 2244 of 2002)
APRIL 13, 2009 D
u

[R.V. RAVEENDRAN AND LOKESHWAR
~
SINGH PANTA, JJ.]

Contract Labour Regulation and Abolition Act, 1970 - s.
10 - Cargo handling work - Granted to a private company by c
the Airport Authority- On cancellation of licence of the private
company, employees thereof on ad hoc basis employed as
casual workers with the Authority - Employees thereafter
forming a Co-operative Society - Society entering into a
-· contract bf contract labour with the Authority - On termination D
of the contract, employees seeking their absorption with the
Authority - Reference of industrial dispute as to whether the
Authority was right in not absorbing the workers - Tribunal
holding that the contract labour agreement between the
Society and the Authority was a sham, nominal and E
camouflage and there was violation of s. 9A of Industrial
Disputes Act, 1947 -Award set aside by Single Judge - On
appeal, the order of Single Judge set aside and the award of
Tribunal upheld by Division Bench of High Court - On appeal
held: The contract labour agreement was not a sham or
F
camouflage - There was no violation of s. 9A of Industrial
Disputes Act - In absence of notification u/s. 10 prohibiting
contract labour in operation of cargo handling work,
employees not entitled to absorption - Industrial Disputes Act,
1947 - s. 9A.
G
Constitution of India, 1950 - Article 226 - Writ jurisdiction
- Interference with award of Industrial tribunal - Scope of -
Held: The award not to be interfered with in writ jurisdiction
merely on the ground that material relied on by the tribunal
1 H
2 SUPREME COURT REPORTS [2009] 8 S.C.R.

A was insufficient or not credible - However, when tribunal's
finding is based on no evidence or irrelevant evidence,
interference with the award is warranted - Jurisdiction - Writ
jurisdiction.

Appellant-Authority established a cargo complex at
8
Madras. Under an agreement, it granted a licence to a
private company as its ground handling agent in respect
of export, import and trans-shipment of cargo
consignments. Appellant had no privity of contract,
C obligation or responsibility towards the workers of the
private company.

When the appellant terminated the cargo handling
contract of the private company with the intention of
inviting fresh tenders, the workers of the private company
D made an appeal to the appellant-Authority to provide
them employment. They also filed a writ petition.
Appellant-Authority unilaterally came forward with a
scheme to mitigate the hardship of the workers and filed
a memo stating to accommodate the workers except by
E way of regular absorption, till such time regular
arrangements made on contract basis through a Co-
operative Society. In view of the memo, the writ petition
was dismissed. Consequently the workers formed a co- ..
operative society. Pending finalization of the contract
F with the Society, appellant-Authority in terms of the memo
started engaging some of the workers as casual labour
on day to day basis depending upon actual requirements.
Further, workers Union filed writ petition seeking ground
handling work to the Society or to absorb the workers on
G the permanent roll of the appellant-Authority. During
pendency of the petition, an agreement was entered into
between the Society and the appellant-Authority whereby
Society agreed to provide 70 loaders/packers on a
consolidated monthly payment. The petition was
dismissed as withdrawn in view of the agreement. By a
H
INTERNATIONAL AIRPORT AUTHORITY OF INDIA v. INTERNATIONAL 3
AIR CARGO WORKERS' UNION & ANR.

further agreement, it was agreed that apart from the A
regular workers, additional workers would be provided
for other miscellaneous porterage jobs. The agreement
interalia provided that members of the Society would have
no direct relationship with appellant-Authority; and that
the Society would comply with the requirements of B
Contract Labour (Regulation and Abolition) Act. The
agreement was for a period upto 1.9.1987. A further fresh
agreement was entered into for a further period of two
years. Wh£m the term of the agreement was coming to an
end, respondent-Union and the Society filed writ petition c
seeking service security to their 89 workers by treating
them at par with regular employees of the Authority. The
petition was dismissed with liberty to raise an industrial
dispute as the workers had already raised an industrial
dispute demanding direct employment and the
0
conciliation had ended in failure. Initially the Central
government refused to refer the dispute for adjudication,
but on direction from High Court, the same was referred
for adjudication to labour court.

In the meantime tender notice was issued by E
appellant-Authority inviting tenders for cargo handling
work. The tender notice was challenged in a writ petition
on the ground that in absence of valid registration u/s. 7
of CLRA Act, the contract labour were to be treated as
direct employees of the appellant-Authority. The petition F
was dismissed holding that in absence of Notification u/
s. 10 of CLRA Act prohibiting employment of contract
labour in respect of cargo handling work and in absence
of any material to show that the workmen were workers
of appellant-Authority, the appropriate remedy was to G
agitate the labour authority. The writ appeal against the
order was dismissed by Division Bench of High Court.

Appellant-Authority again invited fresh tender and the
same was challenged in writ petition which was
H
4 SUPREME COURT REPORTS (2009] 8 S.C.R.

A dismissed on the-ground that issue was pending with the
Industrial tribunal and that the writ petitions for similar
relief had been rejected earlier. Writ appeal against the
order was also dismissed.

Industrial tribunal directed the appellant-Authority to
B
absorb the workers. Writ petition was filed challenging the
award. Single Judge of High court set aside the award ,.
of the tribunal. However, it issued directions viz: (1)
Central Government and Advisory Board to consider /

whether deployment of contract labour with regard to
c packing loading and unloading in the Cargo Complex in
question, should be abolished; (2) If Central Government
issued Notification u/s. 10 of CLRA Act, all those who had
worked as contract labour under the contract between
the Society and the appellant-Authority shall be absorbed.
D In writ appeal, Division Bench of High Court restored the
award of the Tribunal. Hence the present appeal.

Allowing the appeal, the Court

HELD: 1.The contract labour agreement between
E
appellant-Authority and the society was not sham,
nominal or a camouflage and the contract labour were
not the direct employees of appellant-Authority. There
was no violation of Section 9A of Industrial Disputes Act. '
In the absence of a notification u/s. 10 of Contract Labour
F Regulation and Abolition Act prohibiting the employment
of contract labour in the operation of cargo handling
work, the workmen employed as contract labour are not
entitled to claim absorption. [Para 29 (i), (ii) & (iii)] [36-E-
G]
G r
2.1 It is true that in exercising the writ jurisdiction, the
High Court cannot sit in appeal over the findings and
award of the Industrial Tribunal and therefore, cannot re-
appreciate evidence. The findings of fact recorded by a
H
INTERNATIONAL AIRPORT AUTHORITY OF INDIA v. INTERNATIONAL 5
AIR CARGO WORKERS' UNION & ANR.

fact finding authority should ordinarily be considered as A
final. The findings of the Tribunal should not be interfered
in writ jurisdiction merely on the ground that the material
on which the tribunal had acted was insufficient or not
credible. It is also true that as long as the findings of fact
are based on some materials which are relevant, findings B
may not be interfered with merely because another view
is also possible. But where the Tribunal records findings
on no evidence or irrelevant evidence, it is certainly open
to the High Court to interfere with the award of the
Industrial Tribunal. [Para 24] [26-E-G] c
Indian Overseas Bank vs. /OB Staff Canteen Workers'
Union 2000 (4) SCC 245 and R. K. Panda vs. Steel Authority
of India 1994 (5) SCC 204, referred to.

2.2. In the present case, the grounds on which the D
union sought relief of absorption and the grounds on
which the Tribunal ultimately granted relief are completely
different. Having regard to the several decisions in the
earlier rounds of litigation, which had attained finality, it
is doubtful whether the Tribunal could have considered E
these issues at all. Even assuming that the tribunal could
have considered the said grounds as having risen for
decision, there was no basis or material for its finding and
assumptions. [Para 24] [26-H; 27-A, B]

2.3. All the three grounds mentioned by the Tribunal F
and which have found favour with the Division Bench as
indicators of direct employment by the appellant and the
contract labour agreement with the society being a
camouflage, are wholly baseless. [Para 28.3] [36-D]
G
2.4. This is not a case of the workers giving up any
right or interest, but a case of a benefit or concession
being voluntarily extended by appellant-Authority as a
responsible organization, to mitigate hardship. In the
H
6 SUPREME COURT REPORTS [2009] 8 S.C.R.
l-
A absence of any pleadings or evidence about any such
pressure or undue influence, the Tribunal chose to refer
to the said memorandum filed in the writ proceedings as
a settlement reached by compulsion and pressure,
ignoring the fact that it was filed unilaterally in a writ
B petition and accepted by the workers and the High Court.
Having regard to the factual background and having
regard to the fact that the memorandum filed by appellant-
Auth<'pity before the court was not a settlement between
the parties, but was only an unilateral proposal by
c appellant-Authority in a pending writ petition, and in view
of the fact that the union was agreeable for such a course
and did not press the relief of absorption or direct
employment under appellant-Authority it is not possible
to hold that the terms of the memorandum were terms
of a settlement arrived at by appellant-Authority from a
D
dominant position, by applying pressure on the workers.
[Paras 25.4} {29-F-G; 29-C-D]

2.5. The contracts with the society were genuine,
beneficial voluntary bilateral contracts and there was
E nothing sham or nominal about it. At no point of time, the
workers or their union pleaded that the agreement
between appellant-Authority and the society was sham
or nominal. A careful l'eading of the claim statement filed
...
before the tribunal and the evidence given by WW-1
F shows that not even an allegation or claim to that effect
was made in that behalf. In these circumstances, the
Tribunal could not have held that the agreement was
sham and nominal. [Para 27.1] [32-G-H; 33-A]

2.6. The Tribunal goes to the extent of referring to the
G l-'
memo filed by the appellant-Authority before the High "
Court offering to give the cargo handling contract to the
society formed by the workers of the private company
as a compromise or settlement which is opposed to

H
INTERNATIONAL AIRPORT AUTHORITY OF !NOIA v. INTERNATIONAL 7
AIR CARGO WORKERS' UNION & ANR.

public policy, principl.es of natural justice and an unfair A
labour practice. It further describes it as a settlement
which the workers were constrained to enter. No such
pressure was applied and in fact the memo was not an
agreement signed by parties, and there was no obligation
on the part of appellant-Authority to make the said offer B
as per the memo. [Para 27.2] [33-B-C]

2. 7. The direct casual employment given to the
workers was purely an interim or ad hoc measure as a
part of the package proposal made by appellant-Authority
in its memorandum filed before the High Court, and C
accepted by the workers. On formation of the society and
on the society entering into a contract with appellant-
Authority for providing contract labour, there was no need
to employ these workers as casual labourers. Nor did the
workers had any right to claim continuation as casual D
labourers. In fact they did not claim any such right. They
worked for less than 240 days as casual labourers under
appellant-Authority and were not entitled to claim the
benefit of either Section 25F nor regularization on the
basis of such short casual service as daily rated E
employees. Therefore, it follows that on the basis of the
service as casual employees between November, 1985
and July, 1986, the workers are not entitled to any relief.
[Para 26.1] [30-E-G]
F
2.8.The action of appellant-Authority in entering into
a contract with the society was something that was
proposed when the workers were the employees of the
ground handing agent (Private Company). Further, the
effect of the contract with the society was not to change
the conditions of service, but to put an end to the direct G
casual daily wage employment of the said workers. The
workers were specifically put on notice that their casual
employment was purely ad hoc and as a humanitarian

H
8 SUPREME COURT REPORTS (2009) 8 S.C.R.

A measure, to be continued only till a contract labour
contract was negotiated and finalized with the society.
This was recorded by the court while dismissing the writ
petition filed by the workers' union. The workers are not
entitled to put forth a conten.ion contrary to the proposal/
B scheme of appellant-Authority recorded by the High
Court. Therefore, the question of violation of section 9A
of ID Act does not arise. [Para 26.2] [31-D-G]

L. Robert D'Souza v. Executive Engineer, Southern
Raifwc,ys 1982 (1) sec 645 and Workmen of Sur Iron and
C Steel Co. Pvt. Ltd. v. Sur Iron and Steel Company Pvt. Ltd.
1970 (3) sec 618, referred to

3. The order of single Judge is restored. However,
the direction given by the Single Judge that in the event
o of the Central Government issuing a notification u/s. 10
of CLRA Act, all those who had worked as contract
labour under the contract between appellant-Authority
and society should be absorbed in the same manner as
was directed by this Court in Air India is a direction which
E is bad in law, as subsequent to the said decision of the
Single Judge, this Court in SAIL, reversed the decision
in Air India. Appellant-Authority did not challenge the said
direction. SAIL case has overruled Air-India case •
prospectively and it was clarified that any declaration or
F direction issued by industrial adjudicator or High Court
for absorption of contract labour following the judgment
in Air India shall hold good and shall not be set aside,
altered or modified on the basis of the decision in SAIL.
Therefore, the said direction of the Single Judge which
G has attained finality, as appellant-Authority did not
challenge the same, is not disturbed. [Para 30] [37-A-D]

Steel Authority of India Ltd. vs. National Union Waterfront
Workers 2001 (7) sec 1, relied on.

H
INTERNATIONAL AIRPORT AUTHORITY OF !NOIA v. INTERNATIONAL 9
AIR CARGO WORKERS' UNION & ANR.

Gujarat Electricity Board vs. Hind Mazdoor Sabha 1995 A
(5) SCC 27 and Air India Satutory Corporation vs. United
Labour Union 1997 (9) SCC 377, referred to.

Case Law Reference:

1995 (5) sec 21 referred to Para 16 B
2000 (4) sec 245 referred to Para 24

1994 (5) sec 204 referred to Para 24

1982 (1) sec 645 referred to Para 26.2 C
1910 (3) sec 618 referred to Para 26.2

1997 (9) sec 377 referred to Para 30

2001 (7) sec 1 relied on Para .10
D
CIVIL APPELLATE JURISDICTION : Civil Appeal No.
2244 of 2002.

From the Judgment & Order dated 12.11.2001 of the
Division Bench of Madras High Court in Writ Appeal No. 544
of 1998. E

Rachna Joshi lssar, Neha Sharma, Niria Gupta and Bina
Gupta for the Appellant.

S. Guru Krishna Kumar, N.G.R. Prasad, C.K.
F
Chandersekharan and S.R. Setia for the Respondents.

The Judgment of the Court was delivered by

R.V. RAVEENDRAN, J. 1. This appeal by special leave
'-! is- filed against the judgment and order dated 12.11.2001 G
passed by the High Court of Madras in Writ Appeal No.544/
1998 reversing the order dated 15.12.1997 passed by a
learned Single Judge in Writ Petition No. 6126 of 1995 and
restoring the award dated 23.12.1994 passed by the Industrial
Tribunal, Madras in ID No.65 of 1991. The case has a H
10 SUPREME COURT REPORTS (2009] 8 S.C.R.

A chequered historf and has come up after several rounds of
litigations.

2. The International Airport Authority of India (IAAI for short),
the appellant herein, was established under the International
Airports Authority Act, 1971. It established a cargo complex at
8
Madras in the year 1978. Under an agreement dated 30.1.1978,
it granted a licence to a private campany known as M/s.
Airfreight Private Ltd. (referred to as 'Airfreight') to be its ground
handling agent in respect of export, import and transshipment
' cargo consignments. Under the said agreement, Airfreight was
C to receive payment from the owners of the cargo for the work
done, had to engage the services of required number of
workers for handling the cargo and be responsible for payment
of wages to the workers. It was also required to pay a licence
fee to IAAI, linked to the total revenue realized by it. (minimum
D being Rs.12 lacs, maximum being Rs.43.50 lacs plus an agreed
percentage of the revenue over and above 60 lacs). IAAI had
no privity of contract, obligation or responsibility towards the
workers employed by the Airfreight.

E 3. In the year 1985 IAAI decided to take over the ground
handling work and entrust it to a new licencee by inviting
competitive tenders. Therefore, by letter dated 19.9.1985 IAAI
informed Airfreight that the ground handling agency operations
should be handed over to its officers on 31.10.1985. Thus from
F 1.11.1985, Airfreight ceased to be the ground handling agent
of IAAI at Madras Airport. The termination of the handling
contract of Airfreight did not require IAAI or the new licencee
of IAAI to take over the workers employed by Airfreight. In the
circumstances, the workers (loaders and packers) employed by
G Airfreight in connection with the ground handling work, who were I
~·

likely to be retrenched/discharged, made an appeal to IAAI to
provide them employment.

First Round

H 4. The Airfreight Workers Union also filed Writ Petition
INTERNATIONAL AIRPORT AUTHORITY OF INDIA v. INTERNATIONAL 11
AIR CARGO WORKERS' UNION & ANR. [R.V. RAVEENDRAN, J.)

No.11683/1985 in the Madras High Court, seeking a direction A
to IAAI to employ all those workers who had been employed
by Airfreight in connection with the ground handling work at the
Madras Airport cargo complex and not to recruit anyone from
outside. IAAI and Airfreight were impleaded as respondents 1
and 2 in the said writ petition. In view of the appeal made by B
the said workers, IAAI unilaterally came forward with a scheme
to mitigate their hardship, and filed the following memo before
.\, the High Court :

"The authority (IAAI) will consider mitigating the hardship
of the ex-loaders and packers of Mis Air Freight claimed c
to be caused on account of its take over of cargo handling
.' function by accommodating them as far as possible except
by way of regular absorption in the services of IAAI till such
time the authority has made its own regular arrangements,
t' on contract basis through a Co-operative Society formed D
on specified terms and conditions and period as per the
policy of IAAI framed from time to time".

The High Court recorded the memo filed by IAAI and
dismissed the writ petition on 12.12.1985, in view of the E
agreement expressed by the learned counsel for Airfreight
Workers Union.

5. The workers of Airfreight took steps to form a co-
operative society which was registered under the name and
style of 'Airport Industrial Co-operative Service Society Ltd.', F
('society' for short) on 28.11.1985. Pending finalization of a
contract with the said society, in terms of the memo filed in WP
No.11683/1985, IAAI started engaging some of the workers of
Airfreight as casual labour on day to day basis depending on
the actual requirements. G
-I
Second Round
6. The Airfreight Workers Union and the society filed Writ
Petition No.5164 of 1986 seeking a direction to IAAI to hand
H
12 SUPREME COURT REPORTS [2009] 8 S.C.R.

A over the ground handling work at the Madras Airport Cargo
Complex to the society, on terms to be mutually agreed or in
the alternative absorb the ex-employees of Airfreight on its
permanent rolls and till then maintain status quo. During the
pendency of the said writ petition, an agreement was entered
B on 1. 7.1986 under which the society agreed to provide 70
loaders cum packers at the Madras Air Cargo Complex on a
consolidated monthly payment of Rs.45,870. It was further
agreed as follows : (i) that the said arrangement would be in
force for a period of six months; (ii) that if any additional loaders-
c cum-packers were required by IAAI, the society will provide
them at the rate of Rs.15 per manshift; (iii) that IAAI would
sympathetically consider the society's request for increasing the
monthly payment to Rs.50,000; (iv) that the agreement would
be implemented within 10 days; and (v) that W.P. No.5164 of
1986 would be withdrawn voluntarily. The agreement confirmed
D
that the settlement had been arrived at without any pressure "
from either side, in mutual interest, for the smooth operation of
the cargo complex. In view of it, when W.P. No.5164 of 1986
came up on 2.7.1986, the learned counsel submitted that the
matter was settled out of court and accordingly the petition was
E dismissed as withdrawn.

Third Round

7. IAAI agreed to the request of the society to increase the
F monthly payment to Rs.50,000 and a more detailed agreement
was executed on 14.7.1986 between IAAI and society under
which the society agreed to provide manpower (loaders-cum-
packers) for unloading, shifting, stacking, marking unpacking,
packing, stitching, strapping, counting of cargo and other
miscellaneous porterage jobs at Madras Airport, round the
G
clock, in three shifts. The agreement reiterated that the total \-
number of loaders-cum-packers to be made available by the
society on regular basis will be 70; that the additional loaders
cum packers will be made available on a further payment of
Rs.15 per manshift; and that the agreement would be in force
H
INTERNATIONAL AIRPORT AUTHORITY OF INDIA v. INTERNATIONAL 13
AIR CARGO WORKERS' UNION & ANR. [R.V. RAVEENDRAN, J.]

between 10.7.1986 to 19.1.1987. The said agreement A
specifically provided as follows : (a} that the workers (members
of the society) would have no direct relationship whatsoever
with IAAI, except on matters of execution of work and all
dealings and remuneration to them would be through the society
(vide clause 35); (b) that the society should make good any B
damage caused to the cargo consignments or to the property
of IMI, by the loaders-cum-packers, either due to negligence
or willful acts (vide cl. 21); (c) that the society shall comply with
the requirement of Contract Labour (Regulation and Abolition)
Act, 1970 ('CLRA Act' for short) and other labour laws, in C
particular, the statutory provisions regarding minimum wages;
(d) that to ensure that wages were paid by the society to its
employees whose services were made available to IMI as
contract labour, IMI will have the right to demand that the
wages be disbursed by the society to its employees, in the
0
presence of !Mi's representative (vide clause 7); (d) that IMI
wil! not be responsible either for any injury sustained by the
employees of the society during the performance of their duties
or for payment of any damages or compensation due to any
dispute between the society and its workers (vide cl. 8); (e) that
in case it was noticed by IMI that the work carried out by the E
society was not upto the required standard, and the society
failed to improve, inspite of two days written notice about the
bad state of work and demand for improvement, IMI could
impose fines and deduct the amount of fines from the society's
bills; and if fines had no effect, IMI would have the right to F
terminate the contract by giving a month's notice and forfeit the
security deposit (vide clause 9); (f) that the society would carry
out the jobs as per the specifications of IAAI and to its
satisfaction, and in case of any complaints by IMI either as
regards the nature of service or as regards the personnel doing G
-1 the same, the society would attend to the complaints promptly
(vide clause 12); and (g) that the society, apart from being in
constant touch with the officers of IMI, through an authorized
representative, would also have a supervisor employed on
round-the-clock basis at the cargo complex to supervise, control H
14 SUPREME COURT REPORTS [2009] 8 S.C.R.

A and ensure proper execution of the work assigned to the
loaders-cum-packers and to co-ordinate with IAAI (vide clause
17).

8. The society entered into a fresh agreement dated
11.12.1987 agreeing to provide loaders-cum-packers at the
8
Madras airport complex, for a period of two years from
1.9.1987. The lump sum payment by IAAI was revised as
Rs.60,000 per month for providing 70 loaders and three .j_

supervisors. It was agreed that the said amount had been
determined by assuming the minimum wage as Rs.20 per day
c and if there was any statutory increase beyond Rs.20/-, such
excess should be borne by IAAI.

9. When the said term was corning to an end, the
International Air Cargo Workers Union (first respondent) and
D the society filed Writ Petition No.9110 of 1989 seeking service
security to the 89 workers and treat them on par with regular
employees of IAAI by giving them wages/benefits/ privileges of
regular workmen. The said petition was dismissed on
18.12.1989 reserving liberty to raise the issues and demands
E in the proceedings under the Industrial Disputes Act, 1947 ('ID
Act' for short}, as the workers had already raised an industrial
dispute demanding direct employment and the conciliation had
ended in a failure on 26.9.1989.
•
Fourth Round
F
10. The conciliation officer submitted a Failure Report
dated 3.10.1989, in regard to the conciliation Government of
India however refused to refer the dispute for adjudication on
the ground that workmen in .dispute were employed by the
G society and not by IAAI. The order of refusal also stated :
t-
''Therefore the dispute is not maintainable against the IAAI
management under the ID Act indirectly. The Union has
demanded abolition of contract labour system in the
loading/unloading operations etc. The question of abolition /

H
INTERNATIONAL AIRPORT AUTHORITY OF INDIA v. INTERNATIONAL 15
AIR CARGO WORKERS' UNION & ANR. [R.V. RAVEENDRAN, J.]
..;'
of contract labour system is dealt with under CLRA Act A
which lays down the criteria and the procedure for abolition
of this system. The Union could, therefore, avail of the
remedy available under the said Act. ... "

The said communication dated 7.12.1989 was challenged in
B
W.P. No.10719of1990. The said writ petition was allowed by
order dated 26.3.1991 on the ground that the central
-~ government could not pre-judge the issue and while considering
whether a dispute should be referred under section 10 of ID
Act, the government is not supposed to delve into merits of the
case and indulge in any adjudicatory process. The High Court, c
therefore, directed the government to reconsider the matter and
take a fresh decision in regard to the request for reference. In
pursuance of it, the government reconsidered the matter and
referred the following dispute to the Industrial Tribunal, Madras,
.(
by order dated 14.10.1991 : D

"Whether the action of the Management of International
Airport Authority of India, Madras is justified in not
absorbing the workers/members of Airport International
Cooperative Service Society, their Contractor. If not, to E
what relief the concerned workmen are entitled ?"

Fifth Round
' 11. In the meanwhile IAAI issued a tender notice dated
19.11.1990 inviting tenders for the cargo handling work at the F
Air Cargo Complex. The said tender notice was challenged by
the first respondent Union in W.P. No.18560 of 1990. In that
petition, the first respondent Union inter alia contended that the
IAAI had no valid registration of its establishment under section
7 of the CLRA Act and therefore the contract labour namely the G
-t workers employed by the society should be treated directly
employed by IAAI. The said writ petition was dismissed by the
High Court by order dated 6.12.1990 holding that in the
absence of a notification under section 1O of the CLRA Act,
prohibiting employment of contract labour in regard to the H
16 SUPREME COURT REPORTS [2009] 8 S.C.R.

process of cargo handling, and in the absence of any material
...
A
to show that the workers were deemed to be workmen of IMI,
the appropriate remedy was to agitate the matter before the
concerned labour authority instead of filing a writ petition. The
said order of the learned Single Judge was challenged by the
B union by filing a writ appeal (WA No.1265/1990) which was
dismissed by judgment dated 3.1.1991. The Division Bench
noted that IMI had registered its establishment under section
;.
7 of the CLRA Act on 23.3.1990 and the tender notice was
issued only thereafter on 19.11.1990. The Division Bench also
held that the Union having consciously resorted to the remedy
c available under industrial law, and not having demurred against
the dismissal of WP No.9110/1989 cannot re-agitate the same
question in a writ petition challenging the tender notice.

Sixth Round
D
12. Again when IAAI invited fresh tenders, the first
"
respondent Union filed W.P. No.273 of 1994 seeking a
direction to IMI not to invite tenders for loading/unloading
operations or take any other action which will have the effect
E of discharging the workers engaged in the loading and
unloading operations. The said writ petition was dismissed by
order dated 22.6.1994 on the ground that the issue was
pending adjudication by Industrial Tribunal and writ petitions for
similar relief had been rejected earlier. The learned single
Judge observed :
F
"Having regard to the memorandum issued by IAAI
wherein IAAI specifically stated that the workmen
concerned would be accommodated as far as possible
except by way of equal absorption in the services of IMI
G (Underlining is mine), which was noticed and recorded by
j-
S.Mohan J., as he then was, with the consent of Mr. K.S.
Janakiraman, then counsel for workmen, and the
subsequent agreement entered into on 1.7.1986,
14.7.1986 and 21.5.1992, it would not in my opinion, be
H possible for the workmen to claim that the Authority should
INTERNATIONAL AIRPORT AUTHORITY OF INDIA v. INTERNATIONAL 17
AIR CARGO WORKERS' UNION & ANR. [RV RAVEENDRAN, J.]

be directed not to disengage the workmen." A

The writ appeal (WA No.800 of 1994) challenging the said
order was also dismissed on 27.6.1994.

Seventh (current) Round
B
13. The reference made by the central government which
was registered as ID No.65 of 1991 was decided by the
-\ Industrial Tribunal, Madras, in favour of', the workers by award
dated 23.12.1994. The Tribunal direct~d IMI to absorb the
members of the society whose names were stated in the
'
c
annexures to the claim statement, (excluding only those who
died or left service), with effect from the date of the award. In
the said award the tribunal recorded the following findings :

(a) The memo filed by IMI in W.P. No.11683 of 1985
D
(which was agreed to by the workers union), resulting in
dismissal of W. P. No.11683/1985 filed by the workers'
union, amounted to a settlement which was not valid, as
IMI was in a dominant position to dictate terms and
compel the workers union to enter into the settlement to
circumvent the provisions of law and deprive the legitimate E
right of the workmen to permanent status.

(b) The said memo of IMI requiring the workers to form a
~·
society was a ploy adopted by IMI to defeat the legitimate
claim of the workers to permanent status to which they were F
entitled as they had worked for 5 to 14 years previously
under Airfreight and thereafter under the IMI who was the
principal employer and after the termination of the handling
agency of Airfreight, their workers became the direct
employees of IMI. G
(c) After the termination of the handling agency in favour
of Airfreight, its employees were directly engaged by IMI
and received salary from IMI. Thus they became the direct
employees of IAAI from November 1985. Once the
workers became its employees, IMI could not change H
18 SUPREME COURT REPORTS [2009] 8 S.C.R.

A their status from direct workers to indirect workers.

(d) Even when the workmen were working as contract
labour through the society, IAAI was exercising direct
supervision and control over them, directly paying wages
B to them and taking disciplinary action against them and all
these showed that they were considered and dealt with as
direct employees of IAAI and the agreement between IAAI
and the society was sham and nominal. -!-

(e) Any attempt by IAAI to appoint the workmen as contract
c labour is illegal and would amount to an unfair labour
practice.

14. The said award was challenged by IAAI in W.P.
No.6126/1995. A learned Single Judge of Madras High Court
D allowed the said writ petition by order dated 15.12.1997 and
set aside the award of the Tribunal. Nevertheless having regard
to the facts of the case, in particular IAAI being a public sector
undertaking was required to be a model employer, issued the
following directions :
E (i) The Central Government and the Advisory Board
constituted under the CLRA Act should consider whether
deployment of contract labour in regard to packing,
loading and unloading in IAAl's Madras Cargo Complex
should be abolished and take appropriate decision
F thereon.

(ii) Till such a decision was taken, the workers concerned
shall be continued notwithstanding the interruption in their
employment as contract labourers from 1994 to the date
G of that order (15.12.1997), as contract labour on the terms
and conditions that were in force between IAAI and the
society prior to 1994 subject to the condition that the
wages payable to such workers shall not be less than what
was paid to contract labour who were engaged between
H
1994 and 1997; and the said workers shall be engaged
.
. INTERNATIONAL AIRPORT AUTHORITY OF INDIA v. INTERNATIONAL
AIR CARGO WORKERS' UNION & ANR. [R.V. RAVEENDRAN, J.]
19

r;
from January, 1998, their engagement being subject to A
good behaviour, conduct, discipline and efficient
performance.

(iii) If the Central Government issues a notification under
section 10 under the CLRA Act, prohibiting contract labour
in regard to loading, unloading and packing in the cargo B
complex all those who had worked as contract labour
under the contract between the society and the IAAI up to
·\·
the numbers specified in the contract shall be absorbed
in the IAAI as was directed by this Court in the case of Air
India Statutory Corporation v. United Labour Union [1997 c
(9) sec 377].

15. The first respondent Union challenged the said order
of learned Single Judge before a Division Bench in Writ
Appeal No.544/1998. A Division Bench of the Madras High D
Court by its judgment dated 12.11.2001 allowed the appeal and
set aside the order of the learned Single Judge and restored
the award of the Tribunal. The Division Bench was of the view
that when the Tribunal had recorded a finding of fact that the
contract labour were under the direct supervision and control E
of IAAI, that they were paid salary directly by IAAI, that they were
subjected to suspension and other disciplinary control by IAAI,
that the contract between IAAI and the society was sham and
f nominal, the consequential finding that they were the direct
employees of IAAI ought not to have been disturbed by the
F
learned Single Judge. The Division Bench was of the view that
the findings recorded by the tribunal were unexceptionable. The
said decision is under challenge in this appeal.

The legal background and guestions for decision
G
16. When the learned Single Judge considered the matter,
the legal position was governed by the decision in Gujarat
Electricity Board vs. Hind Mazdoor Sabha - 1995 (5) SCC
27, partly modified by Air India Satutory Corporation vs. United
Labour Union - 1997 (9) SCC 377. By the time the Division
H
20 SUPREME COURT REPORTS [2009] 8 S.C.R.

A Bench decided the writ appeal, the decision of the Constitution
Bench in Steel Authority of India Ltd., vs. National Union
Waterfront Workers - 2001 (7) SCC 1 (for short 'SAIL) had
been rendered, but on account of the short gap between the
two dates, the Division Bench did not notice the decision in
B SAIL
17. In Gujarat Electricity Board, this Court held :

"..... the exclusive authority to decide whether the contract
labour should be abolished or not is that of the appropriate
c Government under the said provision. It is further not
disputed before us that the decision of the Government is
final subject, of course, to the judicial review on the usual
grounds. However, as stated earlier, the exclusive
jurisdiction of the appropriate Government under Section
D 10 of the Act arises only where the labour contract is
genuine and the question whether the contract is genuine,
or not can be examined and adjudicated upon by the court
or the industrial adjudicator, as the case may be. Hence
in such cases, the workmen can make a grievance that
E there is no genuine contract and that they are in fact the
employees of the principal employer.

If the contract is sham or not genuine, the workmen of the
so called contractor can raise an industrial dispute for
F declaring that they were always the employees of the
principal employer and for claiming the appropriate service
conditions. When such dispute is raised, it is not a dispute
for abolition of the labour contract and hence the provisions
of Section 10 of the Act will not bar either the raising or
G the adjudication of the dispute. When such dispute is
raised, the industrial adjudicator has to decide whether the
contract is sham or genuine. It is only if the adjudicator
comes to the conclusion that the contract is sham, that he
will have jurisdiction to adjudicate the dispute. If, however,
he comes to the conclusion that the contract is genuine,
H
INTERNATIONAL AIRPORT AUTHORITY OF INDIA v. INTERNATIONAL 21
AIR CARGO WORKERS' UNION & ANR. [R.V. RAVEENDRAN, J.]

~
he may refer the workmen to the appropriate Government A
for abolition of the contract labour under Section 10 of the
Act and keep the dispute pending. However, he can do
so if the dispute is espoused by the direct workmen of the
principal employer. If the workmen of the principal
employer have not espoused the dispute, the adjudicator, B
after coming to the conclusion that the contract is genuine,
has to reject the reference, the dispute being not an
+ industrial dispute within the meaning of Section 2(k) of the
ID Act. He will not be competent to give any relief to the
workmen of the erstwhile contractor even if the labour
contract is abolished by the appropriate Government under
c
Section 10 of the Act."

In view of the provisions of section 10 of the Act, it is only the
appropriate government which has the authority to abolish
genuine labour contract in accordance with the provisions of D
the said section. No court including industrial adjudicator has
jurisdiction to do so.

18. Gujarat Electricity Board was partly overruled in Air
India in regard to the question whether on abolition of contract E
labour system, the contract labour have to be automatically
absorbed by the principal employer, this Court held as follows
in Air India :
-I
"The moment the contract labour system stands prohibited
under section 10(1 ), the embargo to continue as a contract F
labour is put an end direct relationship has been provided
between the workmen and the principal employer.
Thereby, the principal employer directly becomes
responsible for taking the seNices of 1the workmen hitherto
regulated through the contractor. The linkage between the G
contractor and the employee stood snapped and direct
relationship stood restored between the principal employer
and the contract labour as its employees. Considered from
this perspective, all the workmen in the respective seNices
working on contract labour are required to be absorbed H
22 SUPREME COURT REPORTS [2009] 8 S.C.R.

A in the establishment of the employer." "'
19. A course correction, if we may use that expression. was
applied by the Constitution Bench, in SAIL. This Court made it
clear that neither section 10 nor any other provision in CLRA
Act provide!; for automatic absorption of contract labour on
B
issuing a notification by the appropriate government under
section 10(1) of the CLRA Act and consequently the principal.
employer cannot be required to absorb the contract labour +
working in the establishment. This Court further held that on a.
prohibition notification being issued under section 10(1) of the
c CLRA Act, prohibiting employment of contract labour in any
process, operation or other work, if an industrial dispute is
raised by any contract labour in regard to conditions of service,
the industrial adjudicator will have to consider whether the
contractor has been interposed either on the ground of having
D undertaken to produce any given result for the establishment or
for supply of contract labour for work of the establishment under
a genuine contract, or as a mere ruse/camouflage to evade
compliance with various beneficial legislations so as to deprive
the workers of statutory benefits. If the contract is found to be
E sham or nominal and merely a camouflage, then the so called
contract labour will have to be treated as direct employees of
the principal employer and the industrial adjudicator should
direct the principal employer to regularize their services in the
establishment subject to such conditions as it may specify for
F that purpose. On the other hand if the contract is found to be
genuine and at the same time there is a prohibition notification
under section 10( 1) of C LRA Act, in respect of the
establishment, the principal employer intending to employ
regular workmen for the process, operation or other work of the
G establishment in regard to which the prohibition notification has
been issued, it shall give preference to the erstwhile contract i'-
labour if otherwise found suitable, if necessary by giving
relaxation of age. As noticed above, SAIL did not specifically
deal with the legal position as to when a dispute is brought
before the Industrial Adjudicator as to whether the contract
H
INTERNATIONAL AIRPORT AUTHORITY OF !NOIA v. INTERNATIONAL 23
AIR CARGO WORKERS' UNION & ANR. [R.V. RAVEENDRAN, J.]

labour agreement is sham, nominal and merely a camouflage, A
when there is no prohibition notification und1r section 10(1) of
CLRA Act.

20. But where there is no abolition of contract labour under
section 10 of CLRA Act, but the contract labour contend that
8
the contract between principal employer and contractor is sham
and nominal, the remedy is purely under the ID Act. The
+
principles in Gujarat Electricity Board continue to govern the
issue. The remedy of the workmen is to approach the industrial
adjudicator for an adjudication of their dispute that they are the C
direct employees of the principal employer and the agreement
is sham, nominal and merely a camouflage, even when there
is no order under section 10(1) of CLRA Act. The industrial
adjudicator can grant the relief sought if it finds that contract
between principal employer and the contractor is sham,
'{ nominal and merely a camouflage to deny employment benefits D
to the employer and that there is in fact a direct employment,
by applying tests like: who pays the salary; who has the power
to remove/dismiss from service or initiate disciplinary action;
who can tell the employee the way in which the work should be
done, in short who has direction and control over the employee. E
But where there is no notification under section 10 of the CLRA
Act and where it is not proved in the industrial adjudication that
the contract was sham/nominal and camouflage, then the
'JUestion of directing the principal employer to absorb or
regularize the services of the contract labour does not arise. F
The tests that are applied to find out whether a person is an
employee or an independent contractor may not automatically
apply in finding out whether the contract labour agreement is a
sham, nominal and is a mere camouflage. For example, if the
contract is for supply of labour, necessarily, the labour supplied G
by the contractor will work under the directions, supervision and
control of the principal employer but that would not make the
worker a direct employee of the principal employer, if the salary
is paid by contractor, if the right to regulate employment is with
the contractor, and the ultimate supervision and control lies with H
24 SUPREME COURT REPORTS [2009] 8 S.C.R.

A the contractor. The principal employer only controls and directs
the work to be done by a contract labour, when such labour is
assigned/allotted/sent to him. But it is the contractor as
employer, who chooses whether the worker is to be assigned/
allotted to the principal employer or used otherwise. In short
B worker being the employee of the contractor, the ultimate
supervision and control lies with the contractor as he decides
where the employee will work and how long he will work and
subject to what conditions. Only when the contractor assigns/ +
sends the worker to work under the principal employer, the
c worker works under the supervision and control of the principal
employer but that is secondary control. The primary control is
with the contractor.

21. On the contention urged, the following questions arise
for our consideration in this case:
D
(i) Whether the agreement between the contractor
society and the IAAI in regard to cargo handling
work was sham and nominal and consequently, the
workers engaged as contract labour in regard to
E cargo handling work, were the direct employees of
IAAI?

(ii) Whether the status of loaders-cum-packers
engaged in cargo handling work was illegally
changed from that of direct casual labour to
F contract labour in violation of section 9A of the ID
Act, 1947?

(iii) In the absence of a notification under section 10 of
CLRA Act prohibiting the employment of contract
G labour in the process/operation of cargo handling
work, whether the workmen employed as contract
labour are entitled to claim absorption?

22. In the claim statement filed before the Tribunal, the
H specific case of the first respondent representing 88 workers
INTERNATIONAL AIRPORT AUTHORITY OF INDIA v. INTERNATIONAL 25
AIR CARGO WORKERS' UNION & ANR. [R.V. RAVEENDRAN, J.)
. ,,...
was two-fold. The first was that they were employed as direct A
casual labour in IMI from November, 1985 c.:nd July, 1986; that
when the union filed W.P.No.11683/1995 seeking regularization
of the workers, IMI made the union to agree for the terms of a
memorandum filed in the said proceedings, as a result of which
their status was changed to that of contract labour through the B
society which became an intermediary; and that as there was
no settlement as defined in ID Act and as there was no notice
t- under section 9A of the ID Act before effecting change in status
of the said workers, the introduction of the contract between IMI
and the society whereby the direct employees were converted c
into contract labour, was violative of provisions of ID Act. The
second was that the cargo handling (loading, unloading and
packing operations) was one of the main functions of IMI, that
in Calcutta and Bombay Airports, IMI had engaged workers
directly for the said operations, that therefore, IMI had to get
•• the said work done through the direct employees even at
D

Madras and IMI cannot adopt different yardsticks for different
places. What is significant is that the union did not plead that
the contract labour agreement between the society and IMI was
sham and nominal. In fact, it could not do so, as the contract
was not with a private contractor operating with a profit motive,
E
but with a society of the very workers. Nor did the first
respondent Union allege that IMI was.exercising direct control
J
~
and supervision over their work or that IMI was directly paying
their salary or that IMI was directly taking disciplinary action
against them. In short, the two grounds urged were violation of F
section 9A of the ID Act and adoption of different standards and
methods at different cities in regard to cargo handling.

23. The Tribunal did not consider the first ground nor it did
decide the matter with reference to the second ground. On the G
.j other hand, it held that IMI being in a dominant position, the
union was constrained to agree to the IMl's memorandum (filed
in Writ Petition No. 11683 of 1985) and form a co-operative
society as a device to deprive the workmen of their rights and
to circumvent the provisions of various labour laws. The Tribunal H
26 SUPREME COURT REPORTS [2009] 8 S.C.R.

A also held that IAAI could not change the status of the members
of the union from direct to indirect workers after they had
worked as casual employees directly under the IAAI for about
seven months between November, 1985 to July, 1986. It also
held that IAAI exercised the control and supervision over the
B workmen, punished and suspended the erring workers and
made direct payment of wages and therefore, they were to be
treated as the direct employees of IAAI and as they worked for
more than 180 days, they are entitled to permanent status under
the provisions of Tamil Nadu Conferment of Permanent Status
c to Workmen Act, 1984. As noticed above, the Division Bench
of the High Court while reversing the decision of the well
reasoned judgment of the learned Single Judge, re-affirmed
these findings of the Tribunal and restored the award.

24. One of the reasons given by the Division Bench to
D restore the order of the Tribunal is that the High Court in its writ
jurisdiction should not interfere with the award of Industrial
Tribunal based on the findings of fact. Reliance is placed on the
decisions of this Court in Indian Overseas Bank vs. /OB Staff
Canteen Workers' Union [2000 (4) SCC 245] and R. K. Panda
E vs. Steel Authority of India [1994 (5) SCC 204]. It is true that
in exercising the writ jurisdiction, the High Court cannot sit in
appeal over the findings and award of the Industrial Tribunal and
therefore, cannot re-appreciate evidence. The findings of fact
recorded by a fact finding authority should ordinarily be
F considered as final. The findings of the Tribunal should not be
interfered in writ jurisdiction merely on the ground that the
material on which the tribunal had acted was insufficient or not
credible. It is also true that as long as the findings of fact are
based on some materials which are relevant, findings may not
G be interfered with merely because another view is also possible.
But where the Tribunal records findings on no evidence or
irrelevant evidence, it is certainly open to the High Court to
interfere with the award of the Industrial Tribunal. In this case,
the grounds on which the union sought relief of absorption and
H the grounds on which the Tribunal ultimately granted relief are
INTERNATIONAL AIRPORT AUTHORITY OF INDIA v. INTERNATIONAL 27
AIR CARGO WORKERS' UNION & ANR. [R.V. RAVEENDRAN, J.]

4' ~ completely different. Having regard to the several decisions in A
the earlier rounds of litigation, which had attained finality, it is
doubtful whether the Tribunal could have considered these
issues at all. Even assuming that the tribunal could have

...." considered the said grounds as having risen for decision, the
question is whether there was any basis or material for its B
finding and assumptions. Let us examine the findings.

25. The first finding is that there was a settlement between
._
the union and IAAi, as per memorandum filed in Writ
Petition No. 11693 of 1985 and that the workmen were
pressurized and constrained to enter into the said
c
settlement by way of the memorandum filed by IAAI before
the High Court.

(25.1) We find that there was neither a settlement in the
form of a memorandum nor any pressure on the union to agree D
"' for the same. It is necessary to remember the factual
background. IAAI had granted the privilege of cargo handling
work by way of licence to Airfreight. The licence agreement
dated 30.1.1978 between IAAI and Airfreight showed that it was
not a contract labour agreement. In fact, there was no payment E
made by IAAI to Airfreight for the ground handling of cargo. On
the other hand, for the privilege of being appointed as the
ground handling agency, Airfreight paid a licence fee to IAAI
! minimum being Rs.12 lakhs, maximum being Rs.43.50 lakhs
plus a share in the revenue over and above the stipulated F
revenue. Airfreight as ground handling agency, collected
charges in regard to export, import and transhipment cargo
from consignor/consignee and employed its own personnel and
labour to manage and control the entire ground handling cargo.
The said ground handling agency agreement between IAAI and
G
Airfreight continued till 31.10.1985. It is, therefore, clear that
--'< "i upto 31.10.1985, the workmen engaged by Air Freight in regard
to the handling of cargo were the regular/permanent employees
.- of Air Freight, and were in no way connected with IAAI. In fact,

.. they would not even fall with in the definition of "contract labour''
H
28 SUPREME COURT REPORTS (2009] 8 S.C.R.

A in section 2(b) of CLRA Act. When the agreement of IAAI with ~ ..
Air Freight came to an end on 31.10.1985, there was no
. obligation on the part of the IAAI to employ the workers of
Airfreight or to continue with the workers previously employed
by Airfreight in regard to cargo handling work. IAAI at that
8 juncture had the choice either to give a fresh licence to
-
~

someone else, or enter into a contract labour agreement, or
get the work done directly. But before IAAI couid choose or
finalize an alternative arrangement, ex-employees of Airfreight, _.
through the Airfreight workers' Union which subsequently
c became the International Air Cargo Workers' Union (first
respondent herein) approached the Madras High Court in Writ
Petition· No.11683 of 1985 with a prayer that IAAI should
employ the workers employed by Airfreight in regard to ground
handling operations and should not recruit any other person.
D (25.2.) IAAI being a statutory authority, being under an
obligation to act fairly, wanted to mitigate the hardship to the
workers of Airfreight (loaders and packers), as a consequence
of terminating the cargo ground handling contract of Airfreight.
After considering the matter, it therefore, filed a memo before
E the court unilaterally indicating certain steps. It proposed to
mitigate the hardship of such workers. The steps indicated
were:

(a) Workers of Airfreight who were engaged in the cargo •
F handling operation couid form a cooperative society;

(b) Till it made its own arrangements, IAAI would consider
accommodating the ex-loaders and packers of Airfreight
as far as possible, on contract basis through a co-
operative society formed by such workers, on terms,
G conditions and period to be decided by IAAI from time to
time, as per its policy. 1'

(c) Under no circumstances the proposal/scheme would
I

-
involve regular absorption of the workers in the service of ~

H IAAI.
INTERNATIONAL AIRPORT AUTHORITY OF INDIA v. INTERNATIONAL 29
AIR CARGO WORKERS' UNION & ANR. [R.V. RAVEENDRAN, J.]

(25.3.) The workers being clearly aware of the legal A
position that they were not entitled to absorption under IAAI as
they were the regular employees of Airfreight, and that IAAI had
no obligation to absorb or employ them, submitted to the court
that they were agreeable to what was stated by IAAI in the
memorandum. Therefore, the High Court after recording the B
memorandum submitted by IAAI and also recording the
submission of the counsel for the workers' Union that it was
agreeable to the memorandum, dismissed the writ petition.
+ Thus, the claim of workers of Airfreight who were engaged in
the cargo handling operations till 31.10.1985, that they should c
be employed directly as regular employees of IAAI, stood
rejected and attained finality.

(25.4.) Having regard to the said factual background and
having regard to the fact that the memorandum filed by IAAI was
not a settlement between the parties, but was only an uniiateral D
proposal by IAAI in a pending writ petition, and in view of the
fact that the union was agreeable for such a course and did
not press the relief of absorption or direct employment under
IAAI, it is not possible to hold that the terms of the
memorandum were terms of a settlement arrived at by IAAI from E
a dominant position, by applying pressure on the workers. This
is not a case of the workers giving up any right or interest, but
a case of a benefit or concession being voluntarily extended

- i by IAAI as a responsible organization, to mitigate hardship. It
is unfortunate that in the absence of any pleadings or evidence
about any such pressure or undue influence, the Tribunal chose
F

to refer to the said memorandum filed in the writ proceedings
as a settlement reached by compulsion and pressure, ignoring
the fact that it was filed unilaterally in a writ petition and accepted
by the workers and the High Court. G
26. The second finding by the Tribunal is that the workers
"" were entitled to continue as direct casual labour of IAAI
beyond July, 1986 and they would have so continued but
H
30 SUPREME COURT REPORTS (2009] 8 S.C.R.

A for change in their status as contract labour, effected by
IAAI.

(26. 1.) As notice above, these workers were the
permanent employees of Airfreight. When Airfreight ceased to
be the ground handling agent, it was Airfreight's responsibility
B
to deploy its workers elsewhere. But knowing that Airfreight may
not continue them in service in view of termination of the licence,
these workers requested IAAI to offer them employment.
Though there was no obligation to offer them employment or +
give any other relief, on humanitarian grounds and to mitigate
c the hardship of these workers, IAAI proposed that if the workers
formed a co-operative society, it may consider giving the cargo
handling work to such society so that the workers of Airfreight
can earn their livelihood. It also agreed purely as an interim
measure to employ them as casual labourers till the formalities
D of formation of the society and the society entering into a
contract with IAAI were completed. Therefore the direct casual
employment given to the workers was purely an interim or ad
hoc measure as a part of the package proposal made by IMI
in its memorandum filed before the High Court, duly recorded
E by the High Court in W.P. No.11683of1985, and accepted by
the workers. On formation of the society and on the society
entering into a contract with IAAI for providing contract labour,
there was no need to employ these workers as casual
labourers. Nor did the workers had any right to claim .~

F continuation as casual labourers. In fact they did not claim any
such right. They worked for less than 240 days as casual
labourers under IAAI and were not entitled to claim the benefit
of either section 25F nor regularization on the basis of such
short casual service as daily rated employees. Therefore, it
G follows that on the basis of the service as casual employees
between November, 1985 and July, 1986, the workers are not
~
entitled to any relief. ,I

(26.2.) As a corollary, we may also consider whether there
was any violation of section 9A of ID Act. Section 9A provides
H
INTERNATIONAL AIRPORT AUTHORITY OF INDIA v. INTERNATIONAL 31
AIR CARGO WORKERS' UNION & ANR. [R.V. RAVEENDRAN, J.]
l
that no employer, who proposes to effect any change in the A
conditions of service applicable to any workman in respect any
matters specified in the Fourth Schedule, shall effect such
change, without giving to the workmen likely to be affected by
such change a notice in the prescribed manner of the nature
of the change proposed to be effected, or within 21 days of B
giving such notice. Thus the notice of change under section 9A
of ID Act is required only if the employer wants to change the
-1-
condition of service of its workmen in regard to matters
enumerated in the Fourth Schedule to the Act. This Court has
held that a change which is not related to the conditions of c
service enumerated in the Fourth Schedule, in particular,
retrenchment, will not attract the provisions of section 9A of ID
Act (vide workmen of L. Robert D'Souza v. Executive Engineer, -
Southern Railways - 1982 (1) SCC 645, and Workmen of Sur
Iron & Steel Co. Pvt. Ltd. v. Sur Iron & Steel Company Pvt. Ltd.
D
- 1970 (3) sec 618]. In this case, the action of IAAI in entering
into a contract with the society was something that was
proposed when the workers were the employees of Airfreight.
Further, the effect of the contract with the society was not to
change the conditions of service, but to put an end to the direct
casual daily wage employment of the said workers. As noticed E
above, the workers were specifically put on notice that their
casual employment was purely ad hoc and as a humanitarian
~ measure, to be continued only till a contract labour contract was
negotiated and finalized with the society. This was recorded by
the court while dismissing the writ petition filed by the workers' F
union. The workers are not entitled to put forth a contention
contrary to the proposal/scheme of IAAI recorded by the High
Court in the order dated 12.12.1985 passed in W.P. No.11683
of 1985. Therefore, the question of violation of section 9A of
ID Act does not arise. G

27. The third finding is that the contracts dated 1.7.1986,
14. 7.1986 and 11.12.1987 between society and IAAI for
supply of contract labour was sham and nominal.
(
H
32 SUPREME COURT REPORTS [2009] 8 S.C.R.

A (27.1.) We have already referred to the circumstances in "'
which the said contract labour agreement was executed. To
repeat, the workers were the regular and permanent employees
of Airfreight till 31.10.1985. When Airfreight ceased to be the
ground handling agent, apprehending retrenchment by
B Airfreight, the workers appealed to the IAAI to provide them
some employment. They also approached the High Court in a
writ petition. IAAI categorically stated that it cannot absorb them.
...
.
Purely as a humanitarian measure and to mitigate their
hardship, the IAAI offered to entrust the work of handling of
c cargo to a society formed by these workers and the workers
through their union, readily agreed to form a society and the
cargo handling work was given to the society and the workers
as the members of the society benefited from such work/
contract by working as contract laboi.:r. Instead of working under
private employer operating with a profit motive, they worked
D
under their own society. The contract labour agreement was
entered by the IAAI with the workers' society not to deny the
workers of their right to continue as casual direct labour but,
on the other hand, to provide them succour by awarding the
contract to their society. The offer of IAAI to enter into a contract
E ·''
with the society formed by the workers, for supply of contract
labour was readily welcomed and accepted by the workers'
union in W.P. No.11683of1985 filed by it. Virtually, the seal
of approval by the court was put on the same by recording the
proposal and the acceptance of the workers the same. The writ
F petition of the workers was dismissed and attained finality.
Thus, the contracts with the society were genuine, beneficial
voluntary bilateral contracts and there was nothing sham or
nominal about it. It should also be noticed that at no point of
time, the workers or their union pleaded that the agreement
G between IAAI and the society was sham or nominal. A careful
reading of the claim statement filed before the tribunal and the
evidence given by WW-1 shows that not even an allegation or
claim to that effect was made in that behalf. In these
circumstances, it is un-understandable as to how the tribunal
•
H •
INTERNATIONAL AIRPORT ~UTHORITY OF INDIA v. INTERNATIONAL 33
AIR CARGO WORKERS' UNION & ANR. [R.V. RAVEENDRAN, J.]
}·

could have held that the agreement was sham and nominal. A

(27.2.) Unfortunately, the Tribunal goes to the extent of
referring to the memo filed by the IAAI before the High Court in
WP No.11683 of 1985 offering to give the cargo handling
contract to the society formed by the workers of Airfreight, as B
a compromise or settlement which is opposed to public policy,
principles of natural justice and an unfair labour practice. It further
describes it as a settlement which the workers were
constrained to enter. We have already referred to this aspect
and find that no such pressure was applied and in fact the memo
was not an agreement signed by parties, and there was no
c
obligation on the part of IAAI to make the said offer as per the
memo.

28. The last finding is that there were three indicators to
show that contract labour for loading/unloading were direct D
employees of IAAI : direct payment of wages, direct penal
action by IAAI against the contract labour, and direct
control and supervision of contract labour by IAAI.
Therefore, the contracts for supply of contract labour were
'paper' contracts and a camouflage to deny benefits of E
labour laws to the members of first respondent Union.

(28.1.) We will first examine whether there was any
I
material at all to hold that the wages were being directly paid
by IAAI to the contract labour. The contracts between IAAI and
the society make it crystal clear that a lump sum consideration
F
was to be paid by the IAAI to the society and the society was
responsible for payment to its members who were send as
contract labour. The workers did not produce any document to
show that the payment was made by IAAI directly to the workers.
But The Tribunal wrongly held that Ex. W-1 to W-6 showed that G
the payment was directly made. Ex. W-1 is an appointment letter
dated 31.1.1978 issued to one Godaraman by Airfreight. Ex.W-
2 dated 31.10.1983 is a pay-slip of one D. Natarajan issued
by Airfreig~t. Both these documents relate to the period prior
H
34 SUPREME COURT REPORTS [2009] 8 S.C.R.

A to 31.10.1985 when the workers were the permanent
employees of Airfreight, and had absolutely no connection with
IAAI. Ex.W-3 dated 18.4.1988 is a cash receipt for payment of
ex-gratia amount paid to cargo loaders for the period 22.3.1986
to 9.5.1986 and 17.5.1986 to 23.5.1986. It shows that a sum
B of Rs.7,267.20 was paid as ex gratia amount. Though the said
receipt is dated 18.4.1988, it clearly shows that the payment
related to the work done between 22.3.1986 to 9.5.1986 and
17.5.1986 to 23.5.1986 when, admittedly, these workers were
direct casual daily wage employees under IAAI and when the
c contract between IAAI and the society had not even come into
existence. The contract labour arrangement admittedly came
into existence only from 1.7.1986. This document has, therefore,
no relevance to show that any payment was made to the
contract labour directly. Ex.W-4 is a Circular dated 18.2.1986
0 of IAAI notifying that wages of 82 loaders mentioned therein
had been drawn from 1.1.1986 to 31.1.1986 and directed the
said daily wage labourers to receive their wages immediately.
This again is of no relevance as it related to the period prior to
the contract labour agreement when the workers were working
E as casual daily wage employees directly under the IAAI. Ex.W-
5 is the pay-slip of one S.C. Yadav for May, 1990 who was
working in the Bombay Airport and Ex. W-6 is a pay-slip of one
Aseem Das, Cargo Loader for June, 1990 who was working
in the Calcutta Airport. These two documents were produced
only to show that the IAAI had employed some persons as
F direct labour in its cargo department in Calcutta and Bombay
Airports and had nothing to do with the workers who were
working at Madras. On the basis of these documents, the
Tribunal has held that payments were being directly made to
workers when they were contract labours. This is a finding
G based on absolutely no evidence and shockingly perverse and
is liable to be rejected accordingly.

(28.2.) The Tribunal held that IAAI was taking penal and
disciplinary action by suspending and punishing the contract
H labour and that was proof of direct employment. This finding is
INTERNATIONAL AIRPORT AUTHORITY OF INDIA v. INTERNATIONAL 35
AIR CARGO WORKERS' UNION & ANR. [R.V. RAVEENDRAN, J.)
A

also based on no evidence. Not even a single document was A
produced to show that any notice of suspension or show cause
notice for disciplinary action or order imposing punishment was
passed by IAAI in regard to any of the contract labour. Reliance
was placed on Ex.W10, M-15 to M-17, M-21, M-23 as also M2,
24 to 31 and 34 to 40 to prove that IAAI was directly taking B
action against the contract labour. None of them is relevant.
Ex.W-10 is a letter dated 7.3.1990 from IAAI to the.society,
stating that one Ram Chander, loader-cum-packer had given
an assurance to work in a disciplined manner and therefore it
was decided to allow him to work. This is not a communication
addressed to the contract labour but to the society informing
c
the society that Ram Chander may be permitted to work in view
of his assurance to be have properly. M-15 to M-17 are 3 letters
dated 9.3.1987, 16.6.1988 and 11.6.1990 addressed by IAAI
to the society regarding the allotment of contract labour and their
identification. Ex.M-21 is a letter dated 20/22.2.1991 from IAAI D
to the society for supply of contract labour. Ex.M-23 is a letter
dated 14.5.1991 from IAAI to the society regarding duty roster.
Ex.M24 is a letter dated 2.12.1987 from IAAI to the society
informing that there is no improvement in the attendance of the
contract labour, and requesting the society to take necessary E
action to improve their attendance. Ex.M25 to 31 and 34 to 40
are letters complaining about pilferage and other irregularities
-I
~ committed by the contract labour noticed by security personnel.
· These letters give the particulars of the irregularities committed
and inform the society not to send them to work pending F
investigation. None of them relates to imposition of punishment
by IAAI as employer against any employee. These are merely
communications informing the contractor society that some of
the-contract labour provided by it were guilty of some illegal acts
-~ and therefore directing the contractor not to send those G
' employees. This was expressly provided for in clauses 20 and
25 of the Contract Labour Agreement. Thus, none of these
documents is evidence of any penal or disciplinary action by
IAAI against the contract labour.
H
36 SUPREME COURT REPORTS [2009] 8 S.C.R.

A (28.3.) The next ground referred is that the contract labour "
were working under the direct supervision and control of
officers of IAAI. This is not in fact disputed. The contract labour
were engaged in handling cargo, that is loading, unloading and
movement of cargo in the Cargo Complex of IAAI. Naturally,
B the work !tad to be done under the supervision of the officers
of IAAI. Merely because the contract labour work is under the
supervision of the officers of the principal employer, it cannot
~
be taken as evidence of direct employment under the principal
employer. Clause 17 of the Contract Agreement required a
c supervisor to be employed by the society also. Exercise of
some control over the activities of contract labour while they
discharge their duties as labourers, is inevitable and such
exercise is not sufficient to hold that the contract labour will
become the direct employees of the principle employer.

D (28.3.) It is thus seen that all the three grounds mentioned
by the Tribunal and which have found favour with the Division
Bench as indicators of direct employment by IAAI and the
contract labour agreement with the society being a camouflage,
are wholly baseless.
E
29. In view of the above we answer the questions as
follows:

(i) The contract labour agreement between IAAI and ~

the society was not sham, nominal or as a "'
F camouflage and the contract labour were not the
direct employees of IAAI.

(ii) There was no violation of section 9A of the ID Act.

(iii) In the absence of a notification under section 10
G
of CLRA Act prohibiting the employment of contract I-
~
labour in the operation of cargo handling work, the
workmen employed as contract labour are not
entitled to claim absorption.

H 30. In the light of our findings on the two questions the order
INTERNATIONAL AIRPORT AUTHORITY OF INDIA v. INTERNATIONAL 37
AIR CARGO WORKERS' UNION & ANR. [R.V. RAVEENDRAN, J.]

of the Division Bench cannot be sustained and is liable to be A
set aside and the order of the learned Single Judge has to be
restored. We may however note that the last direction given by
the learned Single Judge that in the event of the Central
Government issuing a notification under section 10 of CLRA
Act, all those who had worked as contract labour under the B
contract between IAAI and society should be absorbed in the
same manner as was directed by this Court in Air India is a
direction which is bad in law, as subsequent to the said
decision of the learned Single Judge, this Court in SAIL,
reversed the decision in Air India. IAAI did not challenge the c
said direction. SAIL has also made it clear that the decision in
Air India is overruled prospectively and any declaration or
direction issued by industrial adjudicator or High Court for
absorption of contract labour following the judgment in Air India
.,, shall hold good and shall not be set aside, altered or modified D
on the basis of the decision in SAIL. Therefore, the said
direction of the learned single Judge which has attained finality,
as IAAI did not challenge the same, is not disturbed. In view of
the above, the appeal is allowed in part, the order of the Division
Bench is set aside and the order of the leaned Single Judge E
is restored.

31. We are informed that during the pendency of the writ

- 1 petition, in pursuance of an interim order, the workers were
being paid Rs.1,000/- per month without extracting any work.
In the writ appeal, the Division Bench modified the said interim F
order on 1.9.1998. While continuing the direction for the monthly
payment of Rs.1,000/-, it directed that the workers who reported
for work and worked under the current contractor should be paid
Rs.1,281/- per month and those who did not report to work, but
cl awaited the result of litigation, should continue to receive G
..- Rs.1,000/- per month. In pursuance of it, seven workers
apparently reported to work and worked up to 15.4.2002 and
were paid Rs.1,281 per month; the remaining 70 chose not to
report to work and continued to receive Rs.1,000/- per month.
Apparently those 70 were otherwise engaged or employed and H
38 SUPREME COURT REPORTS [2009] 8 S.C.R.

A therefore did not choose to report to work. The judgment of the
Division Bench dated 12.11.2001 which restored the award of
the Tribunal, was stayed by this Court. When IAAI challenged
the judgment of the Division Bench restoring the award of the
Tribunal, this Court on 15.3.2002 directed that status quo as
B on the date of the judgment of the High Court be maintained.
By a subsequent interim order dated 21.2.2003, this Court
observed that it will be difficult for this court to issue any direction
in terms of the interim order granted by the High Court would
be a bad precedent in labour law, as that would mean directing
c payment for not doing any work. This Court therefore directed
IAAI to extract appropriate work from the workers and to. pay
them Rs.1,000/- to such of them who worked. It was clarified
that payment of Rs.1,000/- would be without prejudice to the
rights of the parties as may be finally determined. In view of our
D final decision, the only further direction we propose to make is
that in regard to the period subsequent to 21.2.2003, if any of
the workers had worked and had been paid only Rs.1,000/- per
month, IAAI shall pay for the said period by way of monthly
salary a sum equivalent to the minimum wages. The difference
between the minimum wage and Rs.1,000 shall be paid by the
E IAAI to the said workers who have worked, within 3 months from
today. Parties to bear their respective costs.

K.K.T. Appeal allowed.