Holding

The Supreme Court held that the reference should be limited to Items 1, 2 and 4 for permanent employment, while Item 3 is to be decided by the State Government under the Contract Labour (Regulation and Abolition) Act, 1970, and the Tribunal must identify and dispose of the remaining claims within six months.

Summary

Contract workers employed by Tata Iron and Steel Company, Jamshedpur, performed permanent and regular tasks before 11‑Feb‑1981 and sought permanent employment with the principal employer. The Bihar Government referred the dispute to the Industrial Tribunal under s.10 of the Industrial Disputes Act. The Tribunal held the workers were contract labour and dismissed the reference, directing that any action be taken under s.10 of the Contract Labour (Regulation and Abolition) Act, 1970, a power vested in the State Government. The High Court dismissed a writ petition challenging the award, and the matter reached the Supreme Court on special leave. The Court noted that contract labour now existed only for waste‑handling (Item 3) and modified the reference to cover only Items 1, 2 and 4 for permanent absorption, leaving Item 3 to be decided by the State Government under the CLA Act. It directed the Tribunal to identify workers wishing permanent employment and dispose of the matter within six months, with no order for costs.

Issues considered

Whether contract workers engaged in permanent and regular work are entitled to permanent employment under the principal employer.
Whether the Industrial Tribunal has jurisdiction to adjudicate the claim or the matter must be dealt with under the Contract Labour (Regulation and Abolition) Act, 1970.
Whether the reference to the Tribunal is maintainable given the workers are classified as contract labour.
Effect of the change in the contract‑labour system (now limited to waste‑handling) on the scope of the dispute.

Legislation cited

Subjects

contract labourpermanent employmentindustrial disputejurisdictionIndustrial TribunalContract Labour (Regulation and Abolition) ActIndustrial Disputes ActTata Iron and Steelabsorption of workers

Judgment

JAMSHEDPUR CONTRACTORS' WORKERS' UNION
A
v.
) STATE OF BIHAR AND ORS.

AUGUST 22, 1990

[RANGANATH MISRA, M.M. PUNCHHI AND B
K. RAMASWAMY, JJ.]

·-- Industrial Disputes Act, 1947: S. JO/Contract Labour (Regula-
lion & Abolition) Act, 1970: S. ]{}-Contract workers engaged by Tata
Iron and Steel Company Ltd. in permanent and regular nature of
work-Whether entitled to permanent employment under the principal
c
-- employer.

The contract workers engaged by the management of the Tata
y Iron and Steel Company Ltd., Jamshedpur in the permanent and regular
nature of work before February 11, 1981 in (I) transportation of mate-
rials within the plant which was not dependent on outside supply, (2) D
processes .connected with manufacturing process, (3) removal and
handling of waste products, and (4) sweeping and cleaning of machines
etc., sought permanent employment under the principal employer. The
dispute was referred by the State Government under s. IOofthe Indus!-
rial Disputes Act to the Industrial Tribunal.
7' E
The Tribunal held that the workmen constituted the contract
labour and, therefore, the reference was not maintainable. It further

-...
held that action, if any, had to be taken under s. 10 of the Contract
Labour (Regulation and Abolition) Act, 1970, power to take steps for
which vested in the State Government and not in the Tribunal. The writ
petition challenging the award was dismissed by the High Court in F
limine.
(
' In the appeal by special leave it was brought to the notice of the
Court on behalf of the management that contract labour was now con-
fined to item 3 only.
G
Disposing of the appeal, the Court ordered:

I. The reference to the Tribunal shall now read: "Whether the
--L contract workers engaged by the management of the Tata Iron and
Steel Company Ltd., Jamshedpur in the permanent and regular nature
of work before 11.2.1981 are entitled to permanent employment in H

977
978 SUPREME COURT REPORTS [1990] 3 S.C.R.

regard to items I, 2 and 4 under the principal employer". [980B-C]
A
2. The State Government to take its own decision within three \
months under the provisions of the Contract Labour (Regulation and
Abolition) Act, 1970 in regard to item No. 3 as to whether the contract
labour employment should be terminated. [980D]
B
3. The Tribunal to dispose oftbe dispute within six months. [980F]
- '4
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4380
of 1990.

c From the Judgment and Order dated 4th October, 1985 of the
Patna High Court in C.W.J.C. No. 4065 of 1985.
-
y
R.K. Garg and A. Sharan for the Appellant.

D
K.K. Venugopal, P. Chidambaram, S. Sukumaran, K.K. Lahiri,
D. Partha Sarthy and S.N. Jha (N.P.) for the Respondents.

The following Order of the Court was delivered:

E Special leave granted. '\

We have heard Mr. Garg for the appellant, Mr. Chidambaram
for the Principal Employer and Mr. Venugopal for the respondent- ~

Union.
...
F A reference was made by the State Government of Bihar under
section 10 of the Industrial Disputes Act to the Industrial Tribunal,
Ranchi, on 9. 7.81 referring to the following disputes for adjudication: )
-
(1) Whether the contract workers engaged by the management
of the Tata Iron and Steel Company Ltd., Jamshedpur in the
G following permanent and regular nature of work before
11.2.1981 are entitled for permanent employment?

(2) Transportation of materials within the plant which is not
dependent on outside supply;

H (3) All processes connected with the manufacturing process;
WORKERS' UNION v. STATE OF BIHAR 979

(4) Removal and handling of waste product; and A
) - (5) Sweeping and cleaning the machines, conveyors, shops and
offices.

The Tribunal by its Award dated 18.12.1984, came to hold that the
workmen constituted the contract labour and, therefore, the reference B
was not maintainable. If further held that action, if any, had to be
taken only under section 10 of the Contract Labour (Regulation and
Abolition) Act, 1970 and the power to take steps under that statutory
prd'vision vested in the State Government and not in the Tribunal.

It may be pointed out that prior to the reference being made to
the Tribunal, the matter had been taken before the Patna High Court
c
and by judgment dated 4.9.1981 the writ petition was disposed of
holding that a reference had already been made to the Industrial Tri-
bunal and the Award was awaited and it was open to the State Govern-
ment to take steps under section 10(1) of the Contract Labour (Regu-
lation and Abolition) Act, 1970. The High Court in its ultimate conclu- D
sion indicated:

"When the Award was finally made by the Industrial Tri-
bunal, to the State Government, as the learned Advocate
General assures us, shall determine the matter in accord-
7 ance with law. If after such an Award is made and no deci- E
sion is taken by the State Government within a reasonable
time, the petitioners shall be at liberty to move this Court

- -,•
again . ... "

The subsequent events have exposed the fallacy of the conclusion of
~ the High Court. In fact if the provisions of the Contract Labour (Regu- F
lation and Abolition) Act, 1970 had been properly kept in view; no
( reliance could have been placed on the fact that the Award was
awaited.

When the Award was made challenge was raised before the High
Coµrt but it refused to entertain the writ petition. The appeal by G
special leave is against the in limine dismissal of the writ petition.

We have heard learned counsel for the parties at some length and
~ it has been brought to our notice by Mr. Chidambaram that in regard
to Items 1, 2 and 4 of the heads of dispute as indicated in the reference,
the contract labour system is no more vogue and contract labour is now H
980 SUPREME COL:RT REPORTS I 1990] 3 S C.R.

A confined to Item 3 only. In view of the changed situation and taking.
into consideration the background of the dispute as also the fact th_at l
the litigation has been pending for almost a decade now, we do not \
think it would be appropriate to take a technical view of the situation
and endorse the decision of the Tribunal. We are, therefore, inclined
to substitute the terms of the reference to the Tribunal by indicating
B that the reference shall now read thus:

"Whether the contract workers engaged by the Manage·
ment of the Tata Iron and Steel Company Ltd., Jamshe- - -~
dpur in the permanent and regular nature of work before
11.2.1981 are entitled to permanent employment in regard
c to Items 1, 2 and 4 under the Principal Employer." _. ·,

In regard to Item No. 3 it shall be for the State Government to
take its own decision under the provisions of the Contract Labour '-I ....
(Regulation and Abolition) Act, 1970 as to whether the contract jo
labour employment should be terminated, and since the State
D Government had already been considering this matter for some time,
we direct the State Government to take its decision in terms of the
assurances held out by its learned Advocate General to the Patna High
Court several years back within three months from now.

To regulate the matter in a more effective way before the TriX
E bunal and keeping in view the submissions made by Mr. Venugopal we
direct that ·the Tribunal shall initially devote attention to identify the
workmen who are desirous of being permanently absorbed under the
Principal Employer and after such identification is made, the matter
should be proceeded with in accordance with law. All parties should be
given full opportunity to raise their contentions and substantiate the
-
F same with such evidence as they like to lead but the Tribunal shall
ensure that the dispute ~is disposed of within six months from today. If)
necessary, full attention should be given to this case so as to comply
with the direction regarding disposal within the time limit set by us.
There would be no order for costs.

PS.S. Appeal disposed of.