Holding

A factual employer‑employee relationship existed, but the appointments were ultra vires and non‑compliant with Articles 14, 16 and the statutory scheme, so regularisation cannot be granted, though the workers are entitled to minimum wages and comparable benefits.

Summary

The case concerned a group of platform mazdoor who had worked for the Assistant Salt Commissioner for periods ranging from ten to thirty years and claimed regularisation after completing more than 240 days of work per year. The department argued that the workers were engaged on daily wages on behalf of salt licencees under Rules 121, 129 and 130 of the Central Excise Rules, and therefore were not its employees. The Labour Court held that the workers were directly employed by the department, regularised them and the High Court dismissed the writ challenging that award. On appeal, the Supreme Court found that while a factual employer‑employee relationship existed, the appointments were made without compliance with Articles 14 and 16 of the Constitution and beyond the scope of the Central Excise and Salt Act, 1944, rendering the regularisation of a non‑existent post impermissible. The Court set aside the Labour Court award, directed that the six remaining workers receive the same benefits as retired colleagues or compensation of Rs 1,00,000 each, be paid minimum wages and that the department issue appropriate statutory directions.

Issues considered

The nature of the employer‑employee relationship between the Assistant Salt Commissioner and the platform mazdoor.
Whether the appointments complied with constitutional provisions (Articles 14, 16) and the Central Excise and Salt Act, 1944 and its Rules.
Whether the industrial dispute should have been before the Labour Court or the Central Administrative Tribunal under the Administrative Tribunals Act, 1985.
The entitlement of the workers to regularisation, minimum wages and other benefits in the absence of a sanctioned post.

Legislation cited

Administrative Tribunals Act, 1985
Central Excise and Salt Act, 1944
Central Excise Rules, 1944s. Rule 121, s. Rule 129, s. Rule 130
Constitution of Indias. Article 14, s. Article 16, s. Article 177, s. Article 309

Subjects

industrial disputeregularisationdaily wage workersemployer-employee relationshipconstitutional equalityminimum wageslabour lawadministrative tribunal jurisdictionCentral Excise and Salt Act

Judgment

[2008] 2 S.C.R. 1056
. ~-_/
A MANAGEMENT, THE ASSISTANT $ALT COMMISSIONER
v.
SECRETARY, CENTRAL ·SALT MAZDOOR UNION
(Civil Appeal No. 1324 of 2008)
FEBRUARY 15, 2008
B
(S.B. S.INHA AND V.S. SIRPURKAR, JJ.)

Labour Laws: Industrial dispute - By daily wagers working
for more than a decade :- Against department of Central
c Government - Seeking regularization of seNice - Stand of
department that it was not the employee as appointment was
on behalf of the licencees undertaking the work - On appeal,
held: Relationship of employer and employee established-
But employees cannot /;Je regularized against a non-existent
D · post - Recruitment was' made without compliance of Articles ·i'
14 and 16 of the Constitution and beyond the scope of statutory ,
rules -The employees, however, were entitled to minimum
wages - In the peculiar facts of the case, direction to confer all
benefits given to similarly situated retired employees and in
E absence thereof to pay compensation - Central Excise Rules,
1944 - rr. 121, 129 and 130 - Central Excise and Salt Act,
1944 - Constitution of India, 1950 - Articles 14, 16, 177 and
309. .

Jurisdiction - Industrial dispute against Central
F Government Department- Jurisdiction of Labour Court- Held:
After enactment of Administrative Tribunal Act, 1985, labour
...... -court had no jurisdiction to decide such question' - But such
plefJ cannot be permitted to be raised for the first time before
Supreme Court - Administrative Tribunal Act, 1985 - Plea .:...
G' Practice and Procedure.
The respondents raised an industrial dispute. They
stated that they had been appointed by the appellant and ·--<
had been working as 'platform. mazdoor:' "lor a period
ranging from 10 to 30 years and as they had completed
H 1056
MGMT., THE ASSISTANT SALT COMMNR. v. SECRETARY, 10~7
CENTRAL SALT MAZDOOR UNION

more than 240 days work in a year, they should be A
regularized. Stand of the appellant was that they were
engaged on daily wages on behalf of the salt licensees
• as per Rules 121, 129 and 130 of Central Excise Rules,
19.44 and the amount of wages paid to them used to be
recover.ed from licensees. Labour Court held that the. B
respondents were the employees of the appellant, as the
respondents are directly working under the appellant; that
disciplinary proceedings were initiated against them and
housing and earned leave facilities were given to them.
Writ petition as well as writ appeal were decided in favour c
of the respondents. Hence the present appeal.
Partly allowing the appeal, the Court
HELD: 1.1 Matter pertaining to grant of licence and
terms and conditions therefore are governed by a statute~
0
Rule 129 of Central Excise Rules imposes an obligation
on the licensee, inter alia, to maintain the salt platform~
Only in the event, the same is not properly maintained,
the appellant can take over the work for such period as it
may deem fit and proper. No statutory provision has been
placed to show that the appellant had the jurisdiction in a E
case of the present nature, namely, to supervise salt,
platforms and drying grounds for a large number of
licensees together and charge a special cess therefor. It
is not known as to whether such an arrangement was
made with an approval o_f the Comm.issioner of Salt. Being F
cretatures of the statute, they were required to act within,
the four corners thereof and not de hors the same. All
activities of the authorities of the Central Government
must have a statutory backing and the impugned action '
is beyond the scope thereof. Thus the appellant has G
exceeded its jurisdiction in arriving at the aforementioned .
arrangements. Neither the Central Excise and Salt Act,
1944 nor the Rules framed thereunder empower the
Assistant Salt Commissioner to take such a step. [Paras ' ·
10,11 and 12, 14] [1064-F, G; 1065-A, B,·c, D, E] H
~
I
1058 SUPREME COURT REPORTS [2008] 2 S.C.R.

A Secretary, State of Karnataka & Ors. v. Uma Devi & Ors. :\.(' -
(2006) 4 sec 1) - followed.
I
1.2. It was expected that at least some evidence wo_uld )'.-

be brought before the Labour Court to show that the
licensees and the Department have entered into a mutual
B arrangement . But no such evidence was adduced.
[Para 14] [1065-E-F]
1.3. Evidently, there is no sanctioned post. Before
making appointment of the respondents, the provisions
c of Articles 14 and 16 of the Constitution of India have not
been complied with. It is not even known whether the
Empfoyment Exchange was notified in regard to the
purported vacancies or not. [Para 15] [1065-G, H; 1066-A]
1.4. It is found from the award that a mention was
D made about a scheme of regularization from 1973, but
neither the same was placed before this court nor reliance ....__
T
was placed upon it. If there existed such a scheme, the
same was required to be framed within the constitutional
framework and in particular the equality clauses as
E enshrined under Articles 14 and 16 of the Constitution
should have been. complied with. [Para 16] [1066-B, C]
1.5. This however, would not me·an that the Central
Government would refuse to provide for the bare minimum
..
\
I

wages· to its workmen. The workmen were not told as to
F on whose behalf the Central Government was working. ~
..
They were not only appointed, disciplinary actions were
taken against some of them. Applying the relevant tests
.for determining the relationship of employer and
employee, a finding of fact has been arrived at that such
G a relationship existed. The said finding being pure finding
of fact is binding on this Court. [Para 16] [1066-C, D, E] -{

1.6. If regularization means permanency, the -
·~
workmen cannot be made permanent. For filling up the .
permanent posts, the posts must be created at the first
H
-t- fylGMT., THE ASSISTANT SALT COMMNR. v. SECRETARY, 1059
CENTRAL SALT MAZDOOR UNION
•
~ ).' instance. They must be sanctioned. Terms and conditions A
must be laid down by making Rules in terms of the
proviso appended to Article 309 of the Constitution of
India or by reason of an executive order made under
Article 177 thereof by the Central Government. [Para 17]
[~ 066-E, F, G] B
"'11'
1;7. However, Central Government cannot be held to
be bound by an act of one of its officers. In terms of the
Rules, the job of a licensee could be taken over directly
under Rule· 130 of the Rules and not beyond the same.
When a statutory action is performed, it is trite, it must be c
done in the manner laid down un~er the statute or not at
all. All actions of the statutory authorities must be confined
within the four corners of the statute. If the appellant was.
not authorized under the statute to take recourse to Rule
130 of the Rules for the purposes as mentioned in the D
-..,/'
written statement before the Labour Court;·the said action
itself must be held to be ~ nullity. In such a situation and
particularly in view of the fact that in making recruitments
of the respondents, the equality clauses contained in
Articles 14 and 16 were not complied with, the E
respondents cannot derive any benefit therefrom.
[Para 19] [1067-A, B, C, D]
1.8. In the peculiar facts and circumstances of the
cas~, it is directed that the remaining six workmen should
-~ be conferred all benefits which have been conferred to F
those who have since superannuated; that if no benefit
had been conferred upon the retired employees, the
Central Government shall, by way of compensation, pay
a sum of Rs.1,00,000/- to each of the workman, that the
services of such respondents who are still working shall G
,. not be terminated except in accordance with law; that the
Commissionerate of Central Excise would issue
necessary directions to all Assistant Salt Commissioners
in rgard to their performance of statutory duties in terms
of Rules 121, 129 and 130 of the Rules; and the workmen H
1060 SUPREME COURT REPORTS [2008] 2 S.C.R.

A must be paid the minimum wages fixed therefore and '-<-
appeJlant shall, subject to any statutory interdict may
fix fair wages for the remaining six workmen. [Para 20]
[1067-D-H; 1068-A]
2. It is assumed that the industrial tribunal had no
B jurisdiction to decide such a question after enactment of
Administrative Tribunal Act, 1985. But such a contention ,,,,.-
had· never been raised. The matter remained pending
before the Labour Court for a long time. Therefore, the
appellant cannot be permitted to rai~e such a contention
C before this Court. [Para 18) [1066-G, 1067-A]
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 1324
of 2008.
From the final Judgment and Order dated 221412004 of
D the High Court of Judicature at Madras in W.A. No. 644/2002.
K. Radhakrishnan, Kiran Bhardwaj, B.V. Balramdas and ~
Vijay Kumar Verma for the Appellant.
Jitendra Sharma, B.K. Pal and P.N. Jha for the Respondent.
E The Judgment of the Court was delivered by
S.B. SINHA, J. 1. Leave granted.
2. Assistant Salt Commissioner, the appellant herein, is
responsible for monitoring production and supply of salt within
F his jurisdiction. Salt Commission is attached to the Department .;
·~

of Industrial Policy and Promotion (Salt Desk), Ministry of
Commerce and Industry.
3. The Parliament enacted Central Excise and Salt Act,
G 1944 (the Act) to consolidate and amend the law relating to
central duties of excise and to salt.
~
4. Chapter Vof the said Act provides for special provisio~·.
relating to salt. Salt manufacture etc. is dealt with in Chapter VI ~ . I

of the Central Excise Rules, 1944. Rule 102 prohipits'
H manufacture of salt except under a licence. Such a licence is to
·~
MGMT., THE ASSISTANT SALT COMMNR. v. SECRETARY, 1061
CENTRAL SALT MAZDOOR UNION [S.B. SINHA, J.]

be granted by the Collector with in the meaning of the provisions A
.. >-' of the said Act.
Rules 129 and 130 of the said Rules read as under:
Rule 129. Licensees to maintain in good order roads,
channels, reservoirs, etc.-The licensee at each salt B
factory shall be bound, at his own expense, to construct
and maintain within the limits of the factory in good repair
to the satisfaction of the Collector all roads and all
channels, reservoirs, embankments, drying grounds,
platforms and other works used or intended to be used for c
the manufacture and storage of salt, and also any works
wherever situated for the protection of the factory from
inundation or for the supply of brine.
Rule 130. When works may be undertaken by Central
Excise Department.- If the licensee fails to execute the D
works specified in rule 129, or, with the sanction of the
Central Government, whenever it appears desirable that
any such work should be undertaken by the Central Excise
Department, the Collector may cause such works to be
executed and may recover the cost thereof, in such E
proportions as may deem fit, from the licensees."
5. Respondents were said to have been appointed by tt:ie
holders of licences granted under the said Act. They were
refused regular appointment by the Assistant Salt
Commissioner, Tuticorin, whereupon an industrial dispute was F
raised. The appropriate Government made the following
reference to the Labour Court ~or its adjudication :
"Is the Assistant Salt Commissioner, Tuticorin justified in
refusing regular employment to the 12 workmen (list G
enclosed) on the ground that they are employed to maintain
salt platform mazdoor on behalf of the licensees and their
appointment is made by the department only for the
purpose of annual .. estimates? If not to what relief the
. concerned workmen are entitled to?''.!·_
H
1062 SUPREME COURT REPORTS . . [2008] 2 S.C.R.

A . 6. According to the respondents, as they had been
appointed by Assistant Salt Commissioher and have been
working as Platform Mazdoor for a period ranging from 1O to
30 years and furthermo.re as they had completed more than 240 - J
f

days work in a year, they should have been regularized in service.
B Before the Labour Court, inter alia, a contention was raised
that the Platform Mazdoors were engaged on daily wages on
behalf of the salt licensees as per Rules 121, 129 and 130 of
the Rules and the amount of wages paid to them is recovered ·
from the licensees by way of special cess.
c It was stated that the said method was adopted when the
platform and drying grounds were being used jointly by a number
of licensees .
.Before the learned Labour Court, however, no evidence
D was adduced on behalf of the appellant.
In its order, the learned Labour Court held:
1) Admittedly, respondents have been working in the
Salt Department.
E 2) They were appointed several decades back and
have been working difectly under the Department.
3) Disciplinary proceedings are initiated by the ~
Departmental Officials.

F 4) They have been given housing facilities as also
earned leave facilities by the Department.
On the said premise, it was held that they are the workmen
empl~yed by the Department itself.

7. A writ petition was preferred thereagainst and a learned
G Single Judge of the High Court dismissed the same stating : .
"Apart from those particulars, one Arulamandam one of
the workmen was examined as W. W.1. He asserted before
the labour court that these workers have been appointed
H several decades ago and are working directly under the
--{_ )

MGMT., THE ASSISTANT SALT COMMNR. v. SECRETARY, 1063
CENTRAL SALT MAZDOOR UNION [S.B. SINHA, J.]
-.y control and supervision of salt Department. It is further A
seen from his evidence that they have been provided w'ith
housing facility, served leave benefits etc. Through w.W.1
Ex.W.1 to W.27 were marked, which clearly prove the claim
of the workmen. Admittedly, the management had not let
in oral or documentary evidence in support of their stand B
taken in their counter statement. It is also brought to my
"I"'
notice that, Ex. W3 proceedings dated 20.12.1991 of the
Deputy Salt Commissioner, Madras addressed to the
Secretary, Central Salt Mazdoor Union, which clearly shows
that all the workmen are eligible to leave benefits. The oral c
evidence of w.w.1 and the abundant documentary evidence
produced on the side of the workman prove their case
said in the absence of any other contra evidence on the
side of the management, I am of the view that the Labour
Court has fully justified in passing an award regularizing
D
their service as claimed. In the absence of any other
material before this Court, I do not find any good reasons
to interfere with the award of the Labour Court.
Consequently, the writ petition fails and the same is
dismissed. No costs."
E
8. An intra court appeal preferred thereagainst has also
been dismissed by the impugned judgment, stating :

"From the materials on records, we find that the Industrial
Dispute has been raised in the year 1992. Having regard
'
~ to the peculiar facts and circumstances of the case, we F
are of the opinion that even though direction regarding to
the extent that regularization is correct, such direction is to
be modified to the extent that regularization should be
given effect to from January 1992 and on that basis,
necessary benefits shall be conferred on all the twelve G
.,._ persons concerned."

9. Mr. Radhakrishnan, learned senior counsel appearing
on behalf of the appellant, submitted :

(1) the industrial dispute raised by the workmen was not H
1064 SUPREME COURT REPORTS [2008] 2 S.C.R.

.
A maintainable as the matter relating to service of a
Central Government employee is required to be
adjudicated before the Central Administrative
Tribunal constituted under the Administrative Tribunals
Act, 1985.
B (2)

(3)
Appellants having been performing a statutory duty,
the impugned order is illegal.
The Commission is not an industry and they having
-
been no sanctioned post, the impugned judgment
c cannot be sustained.
10. Mr. Jitendra Sharma, learned senior counsel
appearing on behalf of the respondent, on the other hand,
submitted:
(1) that the question in relation to the jurisdiction of the ·
D
Industrial Court having never been raised, the same
~
should not be permitted to be raised for the first time
before this Court;
(2) A finding of fact having been arrived at by the learned
E Labour Court that· there exists a relationship of
'employer and employee' between the appellant and .
,
the respondents, interference therewith by this Court
is not warranted; and
(3) In any event, as out of the twelve workmen, six have
F ~
already attained the age of superannuation, this Court
may not exercise its discretionary jurisdiction under
Section 136 of the Constitution of India.
10. Matter pertaining to grant of licence and terms and
conditions therefor are governed by a statute. Rule 129 imposes
G
an obligation on the licensee, inter alia, to maintain the salt ......
platform. Only in the event, the same is not properly maintained,
the appellant can take over the work for such period as it may
deem fit arid proper. No statutory provision has been placed
before us to show that the appellant had the jurif1iction in a
H
~
MGMT., THE ASSISTANT SALT COMMNR. V. SECRETARY, 1065
CENTRAL SALT MAZDOOR UNION [S.B. SINHA, J.]
... ~J case of the present nature, namely, to supervise salt platforms A
and drying grounds for a large number of licensees together
and charge a special cess therefor.
11 . We do not know as to whether such an arrangement
was made with an approval of the Commissionerate of Salt.
Being creatures of the statute, they were required to act within B
the four corners thereof and not de hors the same .
"""
.

12. We are, thus, of the opinion that the appellant has
exceeded to its jurisdiction in arriving at the aforementioned
arrangements. Neither the Central Excise and Salt Act, 1944 c
nor the Rules framed thereunder empower the Assistant Salt
Commissioner to take such a step.
13. We furttiermore fail to understand as to on what basis,
if the stand of the appellant is correct, the workmen have been
granted housing facilities or earned leave, etc. D
·-,/ 14. It is really a matter of grave concern that the authorities
of the Central Government are becoming law unto themselves.
We do not mean to say that there was any lack of bona fide on
the part of the said officer but what we mean is that all activities
of the authorities of th~ Central Government must have a statutory E
backing and the impugne~ action is beyond the scope thereof.
...
We furthermore do not appreciate as to why, even in a
case of this nature, no evidence was adduced. The least which
would be done was to point out before the Labour Court that the F
""... licensees and the Department have entered into a mutual
arrangement. It was expected that at least to the said extent,
some evidence would be brought before the Labour Court.
Some witnesses should have been examined to establish that
a policy decision have been taken in that behalf within the
G
statutory framework .
.,.
15. Evidently, there is no sanctioned post. Before making
appointment of the respondents, the provisions of Articles 14
and 16 have not been complied with. We do not even know
whether the Employment l:xchange was notified in regard to H
~
(

'

1066 SUPREME COURT REPORTS [2008] 2 S.C.R.

A the purported vacancies or not. Regularisation does not mean ~-
permanency. In Secretary, State ofKarnataka & Ors. v. Uma
Devi & Ors. [(2006) 4 SCC 1], any appointment made de hors
the rules, has been held to be illegal by a Constitution Bench of t
I

this Court.
B 16. We find from the award that a mention was made about
~
a scheme of regularization from 1973, but neither the same was ~
~
placed before us nor Mr. Sharma placed any reliance upon it. If ,,.
there existed such a scheme, the same was required to be ~
framed within the constitutional framework and in particular the r
c equality clauses as enshrined under Articles 14 and 16 of the
;

Constitution of India should have been complied with.
This, however, would not mean that the Central Government '
would refuse to provide for the bare minimum wages to its
workmen. The workmen were not told as to on whose behalf the
D
· Central Government was working. They were not only appointed,
disciplinary actions were taken against some of them. Applying ~~

the relevant tests for dete,rmining the relationship of employer
!'""
and employee, a finding of fact has been arrived at that such a
relationship existed.
E
The said finding being pur~ finding of fact is binding on
I
us. The question must, therefore, be posed as to what would be ,\
I
the consequences therefor.
17. If regularization means permanency, the workmen
F cannot be made permanent. For filling up the permanent posts, ..,.. .t
the posts must be created at the first instance. They must be
sanctioned. Terms and conditions must be laid down by making
Rules in terms of the proviso appended to Article 309 of the ~
Constitution of India or by reason of an executive order made
G under Article 177 thereof by the Central Government. r
I
18. We would assume that the industrial tribunal had no -f
jurisdiction to decide such a question after enactment of
Administrative Tribunal Act, 1985. But such a contention had
never been raised. The matter remained pending before the
H

T
MGMT., THE ASSISTANT SALT COMMNR. v. SECRETARY, 1067
CENTRAL SALT MAZDOOR UNION [S.B. SINHA, J.]
Labour Court for a long time. We, therefore, should not permit A
the appellant to raise such a contention before us for the first
time.
19. However, it must be borne in mind that the Central
Government cannot be held to be bound by an act of one of its ·
officers. In terms of the Rules, the job of a licensee could be B
taken over directly under Rule 130 of the Rules and not beyond
the same. When a statutory action is performed, it is trite, it
must be done in the manner laid down under the statute or not
at all. All actions of the statutory authorities must be confined
within the four corners of the statute. If the appellant was not C
authorized under the statute to take recourse to Rule 130 of the
Rules for the purposes as mentioned in the written statement
before the Labour Court, the said action itself must be held to
be a nullity. In such a situation and particularly in view of the fact
'
-,(
that in making recruitments of the respondents, the equality D
clauses contained in Articles 14 and 16 were not complied with,
the respondents cannot derive any benefit therefrom.
20. We, in the peculiar facts and circumstances of the case,
would, therefore, direct:
E
1. The remaining six workmen should be conferred all
benefits which have been conferred to those who
have since superannuated.
2. If no benefit had been conferred upon the retired
employees, the Central Government shall, by way of F
compensation, pay a sum of Rs.1,00,000/- to each
of the workman.
3. The services of such respondents who are still
working shall not be terminated except in accordance G
with law.

\
4. The Commissionerate of Central Excise would issue
necessary directions to all Assistant Salt
Commissioners in regard to their performance of
statutory duties in terms of Rules 121, 129 and 130 H
1068 SUPREME COURT REPORTS [2008] 2 S.C.R. '

A of the Rules.
5. The workmen must be paid the minimum wages fixed _);;.
therefor.
6. Appellant shall, subject to any statutory interdict may
B fix fair wages for the remaining six workmen.
21. The award passed by the Labour Court is set aside.. ~
Appeal is allowed subject to the aforementioned directions with
costs quantified to Rs.10,000/- (Rupees ten thousand only).
c K.K.T. Appeal partly allowed.
-
f,
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