Holding

The Supreme Court held that the Haryana State Electricity Board was the direct employer of the workmen, the contractor was a mere name‑lender, and the Labour Court’s factual findings could not be disturbed absent perversity or error apparent on the face of the record.

Summary

The Haryana State Electricity Board (the Board) awarded a cleaning contract to a contractor, Kashmir Singh, who supplied 42 safai karamcharis. After the workers completed more than 240 days of service, they claimed permanent absorption under Section 10 of the Contract Labour (Regulation & Abolition) Act, 1970. The Labour Court awarded reinstatement with continuity of service and 10% back wages; the High Court affirmed the award but omitted back wages, holding that the contractor was a mere name‑lender and that a direct employer‑employee relationship existed between the Board and the workers. The Board appealed to the Supreme Court. The Court held that no genuine contract‑labour system existed, the Board was the real employer, and the Labour Court’s factual findings could not be disturbed absent perversity or a clear error. Consequently, the appeals were dismissed.

Issues considered

The existence of a principal employer‑employee relationship between the Haryana State Electricity Board and the workmen despite the presence of an intermediary contractor.
Whether the contractor, Kashmir Singh, was a licensed contractor under the Contract Labour (Regulation & Abolition) Act, 1970.
Whether the findings of fact recorded by the Labour Court could be interfered with under Article 226 of the Constitution.
The interpretation and scope of Section 10 of the Contract Labour (Regulation & Abolition) Act, 1970 regarding abolition and absorption of contract labour.

Legislation cited

Subjects

contract labourprincipal employerSection 10labour court awardArticle 226lifting the veilreinstatementback wagesinterpretation of beneficial legislation

Judgment

A SECRETARY, HARYANA STATE ELECTRICITY BOARD
... v.
SURESH AND ORS. ETC. ETC.

MARCH 30, 1999

B [S.B. MAJMUDAR AND UMESH C. BANERJEE, Ji.j .
. .
. Labour Law-Contract Labour (Regulation & Abolition) Act 1970
s. lO-:Regularisation of respondent safai karamcharis-Labour court and

C
fligh Court concurrently fi.nding that contractor was mere name lender
and there existed relationshfp oj employer and workmen between Appellant
Qoaf.d dnd Resj}ondenf~-Held, on facts, there was no system of contract;
-
neither was the Board a principal employer nor contractor licensed as such
under the Act

Practice and Procedure.-Constitution of India, Article 226-Writ
D petitions filed by Appellant challenging Labour Court's finding that workmen
·employed by Board and not contraGtor-:--Held, finding of fact arrived at by
. · La.bour Court canno! be interfered with under Article 226 unless perverse
or error apparent on face o.f.record ·

The dispute. raised by safai k~ramcharis en:iployed by the Appellant
E. Electricity Board as regards their entitlement to be absorbed permanently
on comple$ion of 240 days i_n the yeilr was r:eferred to .the Conciliation
Officer, Panipat culminating in an orde~ of referenc.~ by the State Government
tO the Labour Court. After consideration of the factS .and the evidence taken
th_c Labour Court passed an award inter alia recording that the workmen
F were entitled to reinstatement with continuity of .i>er.vice with lOo/o back
wages.

The award of the Labour Court was challeng_ed by the appellant in writ
petitions in the High Court of Punjab and Q:aryana-. The High Court disposed
of the petitions flolding that there existed a relationship of e~ployer and
G workmen between the appellant and the respondents: The High Court affirmed
the Labour Court's finding that the _so-called contra~tor KS, who was said
_to have .employed the respondents, was a mere name lender and had procured
labour for the appellant from the market. It ordered reinstatement of the
~respondents with continuity of service but without back wages.

H Dismissing the appeals, this Court
' " . 238
SECY. HARYANAS-TATEE.B. v. SURESH [BANERJEE,J.] 239
HELD : 1.1. There was _a conti:actual· relationship between the Board, A
on the one hand, and the employees, .on the other;.Jhere was no .genuine
contract system prevailing at the relevant time wherein the Board could have
acted as only the principal employer and KS as a licens_ed contractor employing
labour on his own account There was nothing to indi~te that even the BoanJ
at the relevant time was registered as principal employer under the Contract B
Labour (Regulation & Abolition} Act, 1970. (249-G-H)

1.2. The Act being a beneficial piece.of legislation, ought to receive the
widest possible interpretation in regard to the words used and unless words
were taken to their maximum amplitude, it would be a violent injustice to the
framers of the law. (248-C)
c
Minerva Mills Ltd. v. Union of India, [1981] 1 SCR 206; D.S. Nakara
v. Union of India, AIR (1983) SC 130 and Hussainbhai v. Alath Factory
Tezhilali Union, (1978) LIC 1264, referred to.

Soloman v. Soloman, (1897) AC 22; Air India Statutory Corporat~on
v. United Labour Union, JT (1996) 11 SC 170;· Denanath v. National D
Fertilisers Ltd, JT (1991) 4 SC 413 and Gujarat Electricity Board v. Hind
Mazdoor Sabha, IT (1995) 4 SC 264, referred to.·

2~ The finding of fact arrived at by the Labour Court could not be
interfered with while exercising powers under Article 226 of the
Constitution, unless the same was otherwise perverse or there existed an E
error apparent on the face of the record. [247-D-E) ·

·CIVIL.APPELLATE JURISDICTION : Civil Appeal Nos. 11335-
11359 of 1995 Etc.

From the Judgment and Order dated 24.1.95 of the Punjab & Haryana F
High Court in C.W. P. Nos. 16033-16040, 16042, 16101, 14894-98, 14171,
17011-17014, 14457-60 and 14613 of 1994.

Sumant Balra, Ms. Asha Bharmula, Ms. Nandini Gore and Ashok K.
Mahajan for the Appellant.
G
Manoj Swamp for the Respondents.

The Judgment of the Court was delivered by

BANERJEE, J. The doctrine of equality as enshrined in the Constitution.
promised an egalitarian society and the Contract Labour (Regulation & H
240 SUPREME COURT REPORTS (1999] 2 S.C.R.

A Abolition) Act, 1970. is the resultant effect of such a constitutional mandate
..
having. its due focus in that perspective. This Court in Minerva Mills' case
( AIR 1980 SC 1789) in no uncertain terms laid down that the equality clause
in the Constitution does not speak of mere formal equality before the law but
.embodies the co~cept of real and substantive .equality which strikes at the
inequalities arising on account ofvast social and economic differentiation and
B is thus consequently an essential ingredient of social and economic justice.
In short, this Court has equated the security clause in the Constitution so a5
to mean that the people of the country ought to be secured of socio-economic
justice by way of a· fusion of Fundamental Right and Directive Principles of
State Policy. As a matte,r of fact this Court has be~n candi~ enough on more
C . occasions than one and rather, frequently to note that socialism ought not
to be treated as a mere concept or an ideal, but the same ought to be practised
in every sphere of life and be treated by the law courts as a constitutional
mandate sillce the law courts exists for the society and required to act as a
guardian-angel of the society. As a matter of fact the socialistic concept of
society is very well laid in Part III and Part IV of the Constitution and the
D Constitution being supreme, it is a bounden duty of the law courts to give
shape and offer reality to such a concept.

In this context reference to the Constitution Bench decision· of this
0

Court in Nakara's·case D.S. Nqkara & Ors. v. Union of India, AIR (1983)
SC 130 seems to be rather apposite. This Court stated that democratic
E socialism aims to end pov·erty, ·.ignorance, disease and inequality of
opportunity. The primary impact of socialism as a matter of fact is to offer
and provide security of life so that the citizens of the country may have two
square meals a day, and maintenance of a minimum standard of life, it is
expected, would lead to the abridgment of the gap between the have-s and
F have not-s. The feudal exploitation and draconian "concept of law ought not~
to outweigh the basic structure of the Constitution, or its socialistic status.

Ours is a socialist State as the Preamble depicts ~d the aim of
socialism, therefore, ought to be to distribute·. the common richness and the
wealth of the country in such a way so as to sub-serve the .need and the
G requirement of the common man. Article 39 is. a pointer in that direction.
Each clause under the Article spe.cifically fixes certain social and economic :
goal so as to expand "the horizon of benefits to be accrued to the general
public at large. In particular reference to Article 39 (a) it is seen that the
State ought to. direct its policies in such a manner so that the citizens - men
and women equally, have the right of an adequate means of livelihood and
H it is in this perspective again thaftJ;ie enactment in the statute book as noticed
SECY. HARYANA STATE E.B. v. SURESH [BANERJEE, J.] 241
above (The Contract Labour (Regulation & Abolition) Act 1970) ought to be A
read and interpreted so that social and economic justice may be achieved and
the constitutional directive be given a full play.

Having noticed the broad features, as above, be it noted these appeals
by Special Leave arise from the order of the Division Bench of the High court
of Punjab & Haryana at Chandigarh. B
The contextual facts depict that the Haryana State Electricity Board
(hereinafter referred to as 'Appellant Board') is a statutory Board with one
of its primary functions being the supply of power to urban and rural areas
in the State of Haryana through its various plants and stations.
c
In order to keep the said plants and stations clean and hygienic, the
Appellant Board, upon tenders being floated, awards contracts to contractors
who undertake the work of keeping the same clean and hygienic. One such
contract was awarded to one Kashmir Singh, for "proper, complete and
hygienic cleaning, sweeping and removal of garbage from tlie Main Plant
Building" at Panipat, at the rate of Rs.33,000 per month with a stipulation D
to engage minimum 42 safai karamcharis with effect from 15th May, 1987
for a period of one year and in terms therewith the Contractor took over the
work and performed the said work through the above-stated Safai Karamcharis.

Subsequently by reason however of a dispute raised by the Safai E
Karamcharis, as regards their entitlement to be absorbed permanently on
completion of 240 days in the year with the Board, the matters were referred
to the Conciliation Officer, Panipat culminating however in an order of reference
by the State Government on 27.12.1988 to the Labour Court, Ambala which
was subsequently transferred to Panipat. On the further factual score, it
appears that the Labour Court upon consideration of the facts and the F
evidence taken on record passed the impugned award inter a/ia recording
therein that the workmen are otherwise entitled to reinstatement with
continuity of service alongwith 10% back wages. We shall revert _to the
order of the Labour Court for further consideration shortly hereafter, but to
complete the basic factual backdrop in the matter it ought to be noted that G
as against the order of the Labour Court, the appellant moved 37 Writ
t
Petitions in the High Court of Punjab and Haryana, which were however,
disposed· of by a common judgment and order dated 24th January, 1995,
inter alia, recording that there existed a relationship of employer and
workmen between the Appellant Board and the respondents and by reason
wherefor, the High Court directed reinstatement of the respondents with H
242 SUPREME COURT REPORTS [1999) 2 S.C.R.

A continuity of service though however, without back wages. While dealing
with these matters the High Court di~ place strong reliance on the obs~rvation
of this Court in the case of Hussainbhai v. Alath Factory Tezhilali Union,
(1978) LIC 1264 wherein this Court observed : ,,·

"Who is employee, in Labour Law? That is the short, die-hard
B question raised here but covered by this Court's earlier decisions.
Like the High Court, we give short shrift to the contention that the
petitioner haq entered into agreements with intermediate contractors
· who had hired the respondent-Union's workmen and so no direct
employer-employee vinculurri juris existed between the petitioner
and the workmen.
c
This argument is impeccable in laissez faire economics 'red in tooth
and claw' and under the Contract Act rooted in English Common
Law. But the human gap of a century yawans betw'een this strict
doctrine and industrial jurisprudence. The source and strength of the
industrial branch of Third World Jurisprudence is social justice
D
proclaimed in the Preamble of the Constitution. This Court in Ganesh
Beedi's case (1974) I Lab LJ 367 AIR (1974) SC 1832 has raised
on British and American rulings hold that mere contracts are not
decisive and the complex of considerations relevant to the
relationship is differe~t. Indian Justice, beyond Atlantic liberalism,
E has a rule of life. And life, in conditions of poverty aplenty, is
livelihood, and livelihood is work with wages. Raw Societal realities,
not fine-spun legal niceties, not competitive ~arket economics but
complex pr9tective principle!!, shape the law when the weaker,
working class sector needs succour for livelihood through labour.
The conceptual confusion between the classical law of contracts and
F the special branch of law sensitive to exploitative situations accounts
for the submission that the High Court is in error in its holding
against the petitioners.

The true test may, with brevity, be indicated once again. Where a
worker or group of workers labours to produce goods or services
G and these goods or services are for the business of another, that
other is, in fact, the employer. He has economic control over the
workers' subsistence, skill, and continued employment. If he, for
any reason, chokes off, the worker is, virtually, laid off. The presence
of intermediate contractors with whom alone the workers have
H immediate or direct relationship ex contractors of no consequences
SECY. HARYANASTATEE.B. v. SURESH [BANERJEE, J.] 243
when, on lifting the veil or looking at the conspectus. of factors A
governing employment, we discern the naked truth, though draped in
different perfect paper arrangement, that the real employer is the
Management, not the immediate contract. Myried devices, half-hidden
in fold after fold of legal form depending on the degree of
concealment needed, the type of industry, the local conditions and the B
like., may be resorted to when labour legislation casts welfare
obligations on the real employer, based on Arts.38, 39, 47, 43 and
43-A of the Constitution. The Court must be astute to avoid the
mischief and achieve the purpose of the law and not be misled by the
maya of legal appearances."

Incidentally, the claim of the workmen arises by reason of
c
discontinuation of the service at the units belonging to the appellant herein.
The Labour Court while adjudicating the issue, as to the justification of the
termination of services of the workmen in terms of the order of reference
under Section I 0 of the Industrial Disputes Act, cam~ to a definite conclusion
on the basis of evidence tendered that the work force did in fact work for D
more than 240 days in the year and as a matter of fact, there was no dispute
raised on that score by the Board and it is on this factual score that the
Labour Court did record that the presence of an intermediary would not,
however, alter the situation as regards the existence of relationship of
employer and the workmen and thus between the Board and the claimants
and as such answered the reference in the affirmative, resulting in a finding E
that the workmen are entitled to be reinstated with continuity of service
along with 10% back-wages. It is this finding of the Labour Court which
stands accept\!d by the High Court in writ petitions under Article 226 of the
Constitution, challenging the validity of the award of the Labo!Jr Court and
the High Court, as noted above rejected the writ petitions stating therein : F
"on the admitted facts of the case it is to be ascertained as to
whether after complying the principle oflifting of the veil, the existence
of the relationship of workman and employer is surfaced or not. After
criticaJly examining the evidence lead in the case, the court below has
come to the conclusion that there existed a relationship of employer G
and workman between the contesting parties and that the
intermediatory contract was just an eye wash.".

The High Court did in fact note with care and caution the doctrine of
'lifting of veil' in industrial jurisprudence and recorded that in the contextual
facts and upon lifting of the veil, question of having any contra opinion as H
244 SUPREME COURT REPORTS [1999). 2 S.C.R.

A regards the exact relationship between the contesting parties would not arise
·and as such directed reinstatement though, however, without any back wages.
While it is true that the doctrine enunciated in Soloman v. Soloman, (1897)
Appeal Cases page 22 came to be recognised in the corporate jurisprudence
but its applicability in the present context cannot be doubted, since the law
B court invariably has to dse up to th~ occasion to do justice between the
parties in a manner as it deems fit. Rescopound stated that the greatest virtue
of the law court is flexibility and as and when the situation so demands, the
law co1;1rt ought to administer justice in accordance therewith and as per the
need of the situation.

C Turning attention, however, on to the legislative intent in the matter of
enactment of the Act of 1970, at the first blush itself, it appears that in
expression of its intent, the legislature very aptly coined the enactment, as
such, for regulatioa and abolition of contract labour.· Conceptually,
engagement of contract labour by itself lends to various abuses and in
accordance with devout objective as enshrined in the Constitution and as
D noticed herein before, this enactment has been introduced in the statute
book in the year 1970, to regulate contract labour and to provide for its
·abolition in 'certain circumstances since prior to such, the factum of
engagement of contract labour stood beset with exploiting tendencies and
resulted in unwholesome labour .practice.
E
Incidentally, however, be it noted that the legislature did not feel it
expedient to do away with the contract labour· altogether, since there are
several fields of employment. where it is not otherwise possible to have
continuous employment and as such, regard being had to the necessities of
the situation, the Act of 1970 provides for continuation of contract labour.
F 'As a matter of fact the legislature in the enactment, has itself provided
various provisions pertaining to the working conditions of contract lab.our,
provided however engagement of contract labour becoming invariable or
necessary in the interest of the concerned industry.

a· The legislation therefore subserves twin. purpose, to wit:

(i) to abolish the contract labour; and

(ii) to regulate the working conditions of contract labour wherever such
employment is required in the interest of the industry.

H There is however, a total unanimity of judicial pronouncements to the
SECY. HARYANA STATEE.B. v. SURESH [BANERJEE, J.) 245
effect that in the event, the contract labour is employed in an establishment A
for seasonal workings, question of abolition would not arise but in the event
of the same being of perennial in nature, that is to say, in the event of the
engagement of labour force through intermediary which is otherwise in the
ordinary course of events and involves continuity in the work, the legislature
is candid enough to record its abolition since, involvement of contractor may B
have its social evil of labour exploitation and thus the contractor ought to go
out of scene bringing together the principal employer and the contract labourers
. rendering the employment as direct, and resultantly a direct employee. This
aspect of the matter has been dealt with great lucidity, by one ofus (Majmudar,
J.) in Air India Statutory Corporation etc. v. United Labour Union & Ors.
etc., JT (1996) 11 SC 170. C
While·recording concurrence with Ramaswamy, J. and but presenting
his own reasons therefor Majmudar, J. observed :

"It has to be kept in view that contract labour system in an
establishment is a tripartite system. In between contract workers and D
the principal employer is the intermediary contractor and because of
this intermediary the employer is treated as principal employer with
various statutory obligations flowing from the Act in connection
with regulation of the working conditions of the contract labourers
who are brought by the intermediary contractor on the principal's
establishment for the benefit and for the purpose of the principal . E.
employer and who do his work on his establishment through the
agency of the• contractor. When .these contract workers carry out the
work of the principal employer which is of a perennial nature and if
provisions of Section 10 get attracted and such contract labour system
in the establishment gets abolished on fulfilment of the conditions F
requisite for that purpose, it is obvious that the intermediary contractor
vanishes and along with him vanishes the term 'principal employer'.
Unless there is a contractor agent there is no principal. Once the
contractor intermediary goes the term 'principal' also goes with it.
Then remains out of this tripartite contractual scenario only two G
parties· - the beneficiaries of the abolition of the erstwhile contract
labour system i.e. the workmen on the one hand and the employer on
the other who is no longer their principal employer but necessarily
becomes a direct employer for these erstwhile contract labourers. It
was urged that Section 10 nowhere provides for such a contingency
in express term. It is obvious that no such express provision was H
246 SUPREME COURT REPORTS [1999] 2 S.C.R.

A required to. be made as the very concept' of abolition of a contract
labour system wherein the work of the contract labour is of perennial
nature for the establishment and ~hich otherwise would have been
done by regular workmen, would posit improvement of the lot of such
workmen and not its worsening ..Implicit in the provision .of-Section
IO is the legislature intent that on abolition of.contract labour sYstem,
B the erstwhile contract-workmen would become direct employees of the ·
employer on whose establishment they were earlier working and we_re
enjoying all. the regulatory facilities on that very establishment under
Chapter V prior to the abolition of such contract· labour system.
Th~ugh the legislature has expressly not mentioned the consequences .
c of such abolition, but the very scheme and ambit of Section I 0 of the
Act clearly indicates the inherent legislative intent of making· the
erstwhile cont.ract labourers direct employees of the employer on
abolition of the intermediary contractor. It was contended that
contractor. might have employed a number of workmen who may: be
in excess of the requirement and, therefore, the principal employer on .·
D ab~lition of the contract labour may be burdened with excess workmen.
It is difficult to appreciate this contention. The very condition engrafted
in section 10(2)(d) shows that while abolishing contract labour from
the given establishment, one o( the relevant considerations for the
appreciate Government is to ascertain whether it is sufficient to appoint
considerable number of whole time workmen. Even otherwise there is
an inbuilt safety valve in Section 21 of the Act which e.njoins the
principal employer to make payment of wages to the given number of
contract workmen who he has permitted to be brought for the work
of the establishment if the contractor fails to make payment 'to them.
It is, therefore, obvious that the principal employer as a wordly
F businessman in his practical commercial wisdom would not allow
contractor to bring larger number of contract labour which may be in
excess of the requirement of the principal employer. On the contrary,
the principal employer would see to it that the contractor brings only
those number of workmen who are required to discharge their duties
to carry out the work of the pri~cipal employer on his establishment
G
through, of course the agency of the contractor. In fact the scheme
of the Act and regulations framed thereunder clearly indicate that
even the number of the workmen required for the given contract work
is to be specified in the licence given to the contractor."

H Incidentally, the Haryana State Electricity Board ~n the usual climrse of
SECY. HARY ANA ST ATE E.B. v. SU RESH [BANERJEE, J.] 247
business has had to maintain the plant and stations as a licencee within the A
meaning of Indian Electricity Act, 1910 and Electricity Supply Act, 1948. This
maintenance work cannot by any stretch be ascribed to be of seasonal nature
but a continued effort to achieve the purpose of its existence in terms of the
statute. The number of employees required for such purpose had been specified
in the contract itself and as a matter of fact supervision of the Board as
regards the attendance has also not been disputed before the Labour Court: B
Maintenance of records pertaining to other ~tatutory duties and liabilities has
also not been di~puted. Documents, as disclosed before the Labour Court, (to
wit Exb. M.5) depict the overall control of the workings of the contract labour
including administrative control being with the Board. We deliberately refrain
ourselves from going m'to the same, since that would be beyond the purview C
of writ jurisdiction and may amount to an appraisal of evidence but the factum
of overall supervision and administration being with the Board and as dealt
with by the Labour Coui:t cannot in any way be doubted. It is on this
perspective that the High Court also thought it fit to rely on_ the judgment
I
and record its affirmation to what had been passed by the Labour Court, since
no reasonable person could come to a conclusion different upon lifting the D
veil. In the contextual facts, we also record our concurrence to the observations
of the High Court that finding of fact arrived at by the Labour .Court \:annot
oth~rwise be interfered with while exercising powers under Article 226 of the
Constitution, unless the same is otherwise perverse or there is existing an
error apparent on the face of the record. E

It would in this context, however, be convenient to note the t>bservations .
of the High Court as below :- .

"The learned counsel for tlie petitioner has tried to argue that the
findings of fact arrived at by the Labour Comt was not based upon F
proper app~eciation of evidence. This plea cannot be ·accepted in as
much as the Labour Court has referred to the whole of the evidence
lead in the case before coming to such a conclusion. Otherwise, also
in view of the law lafd·down by the.Supreme Court in R.K. Panda's
case (supra) the findings of fact arrived at by the Labour Court cannot G
be set aside in writ jurisdiction particularly when it is neither perverse
nor contrary to the record but based only on appreciation of evidence.
Keeping in view the nature of the work being carried on by the
petitioner, the nature of duties which were performed by the
respondents-workmen, the continuity of the work for which the labour
was employed and the fact that the wages were paid by the petitioner- H
248 SUPREME COURT REPORTS (1999] 2 S.C.R.

A employer who supervised and controlled not only the attendance but
also discipline of the workmen in the discharge of their duties and
keeping in view the conditions of contract of the employer with
I Kashmira Singh, Contractor, there is no other conclusion which can
be arrived at except the one that there existing a relationship of
employer and workmen between the contesting parties and the Labour
B Court had rightly passed the award which is impugned in this petition."
Needless to note at this juncture that the Contract Labour.Regulation .
Act being a beneficial piece of legislation as engrafted in the statute book,
ought to receive the widest possible interpretation in regard to the words
used and unless words are .taken to their maximum amplitude, it would be a
C violent injustice to the framers of the law. As a matter of fact law is well
settled by this court and we need not. dilate much by reason, therefor to the
effect that the law courts exist for the society and in the event of there being
a question posed in the matter of interpretation of a beneficial piece of
legislation, question of interpreting the same with a narrow pedantic approach
D would not be justified. On the contrary, the widest possible meaning and
amplitude ought to be offered to the expressions used _as otherwise the
entire legislation would loose its efficacy and contract labour would be left
on the mercy of the intermediary.

As noticed above Draconian concept of law is no longer available for
E the purpose of interpreting a social and beneficial piece of legislation specially
on the wake of the new millennium. The democratic polity ought to survive
with full vigour: socialist status as enshrined in the Constitution ought to be
given its full play and it is in this perspective the question arises - is it
permissible in the new millennium to decry the cry of the labour force desirous
of absorption after working for more than 240 days in an establishment and
F having their workings supervised and administered by an agency within the
meaning of Article 12 of the Constitution - the answer cannot possibly be in
the affirmative - the law courts exist for the society and in the event law courts
feel the requirement in accordance with principles of justice, equity and good
conscience, the law courts ought rise up to the occasion to meet and redress
G the expectation of the people. The expression 'regulation' cannot possibly be
read as contra public interest but in the interest of public.

Reliance on the decision in the case of Denanath & Ors. v. National
Fertilisers Ltd & Ors., JT {1991) 4 SC 413 in support of the Boards contention,
however, stands diluted by reason of the decisions of this Court in Gujarat
H Electricity Board v. Hind Mazdoor Sabha & Ors., JT (1995) 4 SC 26~ and
SECY. HARYANASTATEE.B. v. SURESH [BANERJEE, J.] 249

Air India Statutory Corporation etc. v. U.L.U. & Ors. etc., JT (1996) I I Sd A
109. The ratio as has been decided in Air India's case appears to have
softenen the edges of Dinanath 's ratio. While dealing with this issue in Air
India's case (supra), this court has, as a matter of fact taken note of more or
less the entire catena of cases pertaining to contract labour and we do thus
feel it wholly unnecessary to deal with the same in extenso excepting however B

- recording some observations of this Court in Air India's case (supra) as
below:-

"In this behalf, it is necessary to .recapitulate that OJl abolition of the
contract labour system, by necessary implication, the principal
employer is under statutory obligation to absorb the contract labour. C
The linkage between the contractor and the employee stood snapped
and direct relationship stood restored between principal employer and
the contract labou; as its employees. Considered from this perspective,
ail the workmen in the respective services working on contract labour
are required to be absorbed in the establishment of the appellant."
It has to be kept in view that this is not a case in which it is found that D
there was any genuine contract labour system prevailing with the Board. If
it was a genuine contract system, then obviously, it had to be abolished as
per Section I 0 of the Contract Labour Regulation and Abolition Act after
following the procedure laid down therein. However, on the facts of the
present case, it was found by the Labour Court and as confirmed by the High E
Court that the so called contractor Kashmir Singh was a mere name lender and
had procured labour for the Board from the open market. He was almost a
broker or an agent of the Board for that purpose. The Labour Court also noted
that the Management witness Shri A.K. Chaudhary also could not tell whether
Shri Kahsmir Singh was a licensed contractor or not. That workmen had made

- a statement that Shri Kashmir Singh was not a licensed contractor. Under
these circumstances, it has to be held that factually there was no genuine
contract system prevailing at the relevant time wherein the Board could have
F

acted as only the principal employer and Kashmir Singh as a licensed contractor
employing labour on his own account. It is also pertinent to note that nothing
was brought on record to indicate that even the Board at the relevant time, G
was registered as principal employer under the Contract Labour Regulation
and Abolition Act. Once the Board was not a principal employer and the so
called contractor Kashmir Singh was not a licensed contractor under the Act,
the inevitable conclusion that had to be reached was to the effect that the
so called contract system was a mere camouflage, smoke and a screen and
disguised in almost a transparent veil which could easily be pierced and the H
250 SUPREME COURT REPORTS (1999] 2 S.C.R.

A real contractual relationship between the Board, on the one hand, and the
employees, on the other, could be clearly visualised..

Before we conclude, the other aspect of the matter as has been ,
contended by th_e learned.Advocate, appearing in support of the appeals ought
to be noticed,
.•. to the effect that as a matter of fact the principal employer, ·
B namely, the Board has in fact applied for registration of establishment and
there are documentary evidence available in support thereof. Though, however, ·
no such case has been made out rl:or the issue raised either before the Labour
-
Court or before· the High Court, this Court, however, to subserve the ends
of justice permitted the appellant to file documentary evidence "in support of
C the same and as such three weeks' time was granted at the conclusion of the
hearing on '13th .January, 1999 so that the same may be produced before the
Court. We however wish to place on record that in the normal circumstances,
no such· opportunities are granted, especially at this stage of the proceeding,
but by reason of special facts, which are singularly singular, this Court g_ranted
such an opportunity so as to meet the ends of justice. The appellant, however,
D has failed to obtain such an opportunity. and as a matter of fact no such
documentary evidence has seen the light of the day even after such an
opportunity to the appellant.

In that view of the matter we do not see any merit in these appeals and
the appeals therefore fail and are thus dismissed. No order however as to
E costs.

In view of the order as above, ·we do not deem it fit to pass any order
in the pending Interlocutory Applications including the Application for
Contempt and the same thus stand disposed of, without any order as to costs.

F S.M. Appeals dismissed.
-

·-
'