Holding

Exemption under Section 23 is limited to classes of security guards employed in factories or establishments, not to agencies, and the State Government’s refusal to grant exemption does not require a reasoned order absent mala‑fide or arbitrariness.

Summary

The Supreme Court examined applications by security agencies for exemption from the Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981. The State Government had rejected all exemption requests, citing a policy that granting exemptions would not be in the interest of the security guards. The High Court had directed the Government to reconsider the applications afresh, but the Supreme Court held that the statutory language of Section 23 confines exemption to classes of security guards employed in factories or establishments, not to agencies themselves. Consequently, the Government’s refusal to grant exemption was within its discretion and did not require the State to give reasons unless there was mala‑fide or arbitrariness, which was not shown. The Court allowed the appeals and dismissed the writ petitions, confirming the validity of the Government’s orders.

Issues considered

Whether Section 23 of the Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981 permits exemption to be granted to security agencies as a whole.
Whether the State Government must state reasons for refusing exemption under the Act.
Whether the High Court erred in directing a fresh consideration of exemption applications on the ground of a policy decision.
Whether the exemption under Section 23 is in respect of agencies/agents or of security guards employed in factories or establishments.

Legislation cited

Bombay Shops and Establishments Act, 1948
Factories Act, 1948
Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981s. 1(4), s. 2(10), s. 22, s. 23, s. 3

Subjects

exemptionadministrative lawgovernment policyreasoned decisionsecurity guardsagencylocus standiwrit petitionemployment regulation

Judgment

SECURITY GUARDS BOARD FOR GREATER
A
BOMBAY & THANA DISTT. ETC.
v.
SECURITY & PERSONNEL SERVICE PVT. LTD.
& ORS. ETC.

APRIL 28, 1987 B

)_ (0. CHINNAPPA REDDY AND V. KHALID, JJ.]

Maharashtra Private Security Guards (Regulation of Employment
and Welfare) Act, 1981: s. 23 read with ss. 22 and 1(4)-Exemption

- from Act-Denial of to security agencies or agents-Validity of- C
Government whether required to state reasons.

Administrative Law:
J...
Exemption from provisions of a statute-Refusal of-Govern-
ment whether to state reasons. D

Section 1(4) of the Maharashtra Private Security Guards (Regula-
'( tion of Employment and Welfare) Act, 1981 makes the provisions of the
Act applicable to security guards who were not direct and regular
employees of the factory or the establishment. A 'security guard' is
defined in s. 2(10) as a person who is engaged or is to be engaged E
through any agency or an agent to do security work. Section 3
empowers the State Government to make schemes to provide for the
registration of employers and security guards and the terms and condl-
tions of employment of registered security guards and their general
welfare. Section 22 provides for preservation of existing rights and
privileges of security guards if they are more favourable to them than F
those under the Act. Section 23 empowers the State Government to
exempt security guards from the operation of the provisions of the Act
or any scheme made thereunder.

The Security Guards Board was constituted under s. 6 of the Act
and the Private Security Guards (Regulation of Employment and G
Welfare) Scheme, 1981 was also made to give effect to the Act.

The respondents' applications for exemption from the provisions
of the Act having been rejected by the State Government they filed writ
petitions before the High Court which were dismissed by a Single
Judge. H
19

...
20 SUPREME COURT REPORTS [1987] 3 S.C.R.

A On appeal, the Division Bench took the view that the applications
, bad been rejected as a result of the policy decision not to grant exeinp·
tlon to any security agency and that this was wrong, that each applica·
tion for exemption had to he considered on its own merits and so dis·
posed of, and consequently directed the Government to consider the
applications afresh.
B
In these appeals, it was contended for the appellant Securify
Guards Board that s. 23 of the Act did not contemplate the grant of
exemption in favour of a security agency, on which ground alone the

c
applications were liable to he rejected, and that the applications were
rejected after consideration on merits and not on the basi~ of any policy
decision. For the respondents it was argued that ifs. 23 was read in the
light of s. 22 it would follow that an agency could ask for exemption
--
from the operation of the Act, that wherever the conditions of service
were better than those proposed under the scheme the Government was
under a duty to grant exemption, and that the Act did not contemplate
the abolition of the agency system as such or termination of the contract
D of employment between the agency and the security guards, or for the
transfer of the services of the security guards from the employment of
the agency to that of the factory or establishment.

Allowing the appeals, the Court,

E HELD: 1. The orders of the State Government refusing to grant
exemption to the respondents from the operation of the provisions of the
Maharashtra Private Security Guards (Regulation of Employment and
Welfare) Act, 1981 do not call for any interference. [32GH]

2. Section 23 of the Act read with s. 1(4) and the definition of
F 'security guard' in s. 2(10) makes it apparent that the exemption is in
regard to security guards employed in any factory or establishment or
in any class or classes of factories or establishments and not in respect of
an agency or an agent: All security guards employed in a factory may he
exempted or security guards of a particular grade or doing a particular
type of work in the factory may he exempted. Again, all security guards
G employed in a class of factories, say textile mills, may be exempted. All ~
security guards in textile mills doing a particular type of work or draw·
ing a particular scale of pay may be exempted. The correlationship of
the security guards or classes of security guards who may he exempted
from the operation orthe Act is to the factory or establishment or class
or classes of factories or establishments in which they work and not to
H the agency or agent through and by whom they are employed. [30A·D]
)

SECURITY GUARDS BOARD v. S. & P SERVICE 21

3. The question is not one of locus standi at all but which or what A
class of security guards are to be exempted from the operation of the
Act and the scheme. The security guards or classes of security guards
employed in a factory or establishment or in a class or classes of
factories or establishments may apply to the Government to exempt
them from the operation of the Act. Similarly a factory or an establish-
ment or a class or classes of factories or establishmentS may apply to the B
)_ Government to exempt security guards employed in their factories or
establishments from the operation of the Act . .Where security guards
:f have been engaged or are to be engaged through an agency or agent in

-
any factory or establishment or a class of factories or establishments,
'"!
such an agency or agent may also apply to the Government, not to
exempt all security guards engaged or to be engaged through them hut C
to exempt security guards engaged or to be engaged in a factory or
·"-' establishment or a class of factories or establishments. The exemption to
be granted by the Government is not to be of any agency or agent but
only of security guards employed in a factory or establishment or a class
or classes of factories or establishments. [30H-3IA; 30E; G; 3IABI
D
4. Even if s. 23 is read in the light of s. 22 it does not follow that
any agency can ask for exemption from the operation of the Act of all
security guards employed through them. All thats. 22 provides in effect
is that the rights or privileges of any registered security guard shall not
be altered to his detriment, which only means that if hitherto as an
employee of the agency the terms and conditions of his service were E
more attractive on the whole than the terms and conditions of service
otlered by the Act and the scheme under the factory or establish-
ment, the original terms and conditions of service will be preserved
and become applicable to their service under the factory or estab-
lishment. [31B-D]
F
5. The Act and the scheme provide for termination of the con-
tract of employment between the agency and the security guards, and
by necessary implication the services of the security guards will stand
transterred to the service of the factory or establishment on allotment to
it by the Board. It is in that fashion, among other things, that security
of service is secured to the security guards. [3IDE]
G
6. In cases of this nature where exemptions are sought from the
operation of the Act, it Is not necessary for the Government to state its
reasons. Of course if there is a charge of mala tides or arbitrariness, the
Court may look into the matter to discover if there were any ma/a /ides
or if the refusal of the Government was arbitrary. In the instant case,
there was none. [32GH] H

•
22 SUPREME COURT REPORTS [1987] 3 S.C.R.

A 7. The merits of each case were fully considered by the
Government and the applications were rejected because it was their
policy not to grant exemption if it was not in the interest of the secu·
rity guards. There was no predetermined policy decision as
such. [32F]

B
9. Every individual registered security guard who was previously
working in a factory or establishment will be allotted to the same
factory or establishment and if the total package of the terms and
conditions of his service were better than the terms and conditions of

c
service offered by the Board such person would be employed on the
previous terms and conditions of service. [33CD] -
9. Charging of 'capitation fee' by a union before sponsoring a _...1,
security guard for registration under the scheme is not permissible
under the Act or the scheme. [33E)

D
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos.
1926-50 of 1986 etc.

From the Judgment and Order dated 20.2.1986 of the Bombay
High Court in O.S. Appeal Nos. 616, 673, 674 to 692, 694 and 725
E of 1985.

Soli J. Sorabji, K.K. Singhvi, A.K. Gupta, B. Bhushan, N.P. 4'-
<
Mohindra, J.P. Cama, Mukul Mudgal, A.M. Khanwilkar, K.V.
Murrup Menon, Mrs. V.D. Khanna, M.G. Ramachandran, Pratap
H. Toprani, Sanjeev Anand and A.S. Bhasme for the appearing
F parties.

The Judgment of the Court was delivered by

CHINNAPPA REDDY, J. It appears that there were serious
complaints about the service conditions of about 70,000 persons work·
G ing as Security Guards in various factories and establishments in Grea·
ter Bombay and Thane Industrial Complex, the majority of whom
were employed through about 250 Security Agencies operating in_
those areas. The complaints related not merely to insufficient remune·
ration paid to them by the agencies, but also to insecurity of service
and other forms of exploitation. There was a sample survey conducted
H by the Government of Maharashtra to ascertain the extent of exploita·

..
SECURITY GUARDS BOARD v. S. & P. SERVICE [REDDY, J.] 23

tion and to secure information regarding the service conditions of the A
Security Guards. The sample survey revealed that most of the agencies
were not registered under the Shops and Establishments Act. There
was oPJy one registered union but that union accounted for member-
ship of 2200 only. It was found that most of the Security Guards did
not enjoy the benefit of any Provident Fund Scheme or any scheme of
J Gratuity. Most of them were not covered by the Employees' State B
Insurance Scheme and had no medical facilities. Leave facilities were
inadequate. Rest intervals were not properly provided. Wages were
low and only a few agencies paid overtime and bonus. Most of

- them did not also have either drinking water facility, canteen facility or
transport facility. A very meagre percentage of Guards were provided
with living quarters. It was recommended that it was absolutely neces- C
sary to prevent exploitation of the unprotected Security Guards and to
provide them with better service conditions. Pursuant to the report of
the committee which made the sample survey, the Government issued
the Maharashtra Private Security Guards (Regulation of Employment
and Welfare) Ordinance. The Ordinance was replaced by the
Maharashtra Private Security Guards (Regulation of Employment and D
Welfare) Act, 1981. The vires of the Act were challenged in various
writ petitions filed in the High Court of Bombay by Security Agencies.
They were dismissed by the High Court and a petition for special leave
to appeal under Art. 136 of the Constitution was dismissed by the
Supreme Court on January 5, 1983. While dismissing the special leave
petition, the Supreme Court gave the following directions: E

"It appears that some of the petitioners have applied to the
State Government to accord exemption to them from the
--(
operation of the provisions of the Private Security Guards
(Regulation of Employment and Welfare). Scheme, 1981
and those applications are under the consideration of the F
State Government. We, therefore, direct that the above
scheme shall not be enforced as against the petitioners
herein till the end of January 1983. The State Government
should dispose all applications made by the petitioners
before January 31, 1983."
~ G
This order was subsequently modified in the following manner:

"The order dated January 5, 1983 is modified by deleting
the entire portion of the order following upon the words
"these special leave petitions are dismissed." The scheme
will be brought into force forthwith." H

...
24 SUPREME COURT REPORTS [ 1987) 3 S.C. R.

A In the judgment of the learned Single Judge who dismissed the
writ petitions initially, the learned Judge had held that it was compe-
tent for security agencies to seek exemption from the operation of the
provisions of the Act. As many as 139 security agencies applied to the
Government under sec. 23 of the Act for grant of exemption from the
provisions of the Act. These applications were first screened by the
B Advisory Committee who recommended that exemption might be
granted to 21 agencies. The cases of four other agencies which were
not recommended by the Advisory Committee were again investigated
by the Labour Commissioner who recommended that these four agen-
cies also might be granted exemption from the provisions of the Act.
On June 28, 1984, the Government of Maharashtra finally rejected all
C the applications for exemption filed by the various security agencies.
Several security agencies thereupon filed writ petitions in the High
-
Court of Bombay. The twenty five writ petitions filed by the twenty
one agencies whose cases were recommended by the Advisory Com-
mittee and the four agencies whose cases were recommended by the
Labour Commissioner were admitted by the High Court and the rest
D were dismissed in limine. The twenty five writ petitions which were
admitted were also finally dismissed on July 11, 1985 by a learned
Single Judge. On appeals preferred by the twenty five security agen-
cies, a Division Bench of the Bombay High Court directed the State
Government to consider afresh the applications for exemption. An
objection raised on behalf of the Security Guards Board and the
E Government of Maharashtra that security agencies could not seek
exemption under sec. 23 of the Act was overruled. The Bombay High
Court took the view that the applications had been rejected as a result
of the policy decision not to grant exemption to any security agency
and that this was wrong. The High Court held that each application for
exemption had to be considered on its own merits and so disposed of.
F Hence the direction to the Government to consider the applications
afresh.

The Security Guards Board constituted under sec. 6 of the Act
has preferred these twenty five appeals against the judgment of the
Bombay High Court.
G ~
Shri K.K. Singhvi, learned counsel for the appellant, the Secu-
rity Guards Board for Greater Bombay and Thana District, argued that
sec. 23 of the Act did not contemplate the grant of exemption in favour
of a security agency and therefore, the applications for exemption
were liable to be rejected on fhat ground alone. He further submitted
H that the High Court was wrong in holding that the applications had
SECURITY GUARDS BOARD v. S. & P. SERVICE !REDDY. J.J 25

been rejected on the basis of any policy decision. They were rejected A
after consideration of all the applications on merits. If there was a
policy decision such a decision was arrived at on a consideration of all
the applications for exemption and it was that none of the applications
deserved to be allowed. Shri Soli Sorabji and other learned counsel,
who followed him, argued that the Act did not contemplate the aboli-
tion of the agency system as such and it was only meant to regulate and B
provide better conditions of service for Security Guards.. Wherever
the conditions of service were better than those proposed under the
Scheme, the Government was under a duty to grant the necessary
exemption so that the employees may have the benefit of the advan-
tageous conditions of service. According to them, this result flowed

- from a perusal of the Act, in particular secs. 22 and 23. It was also C
urged that the High Court was right in its conclusion that the applica-
tions for exemption had not been rejected on merits but because of a
policy decision.

We may now proceed to consider the rival submissions with D
reference to the provisions of the Maharashtra Private Security
Guards (Regulation of Employment and Welfare) Act, 1981. The
'( preamble to the Ordinance which preceded the Act recited, " .....
and whereas the Governor of Maharashtra is satisfied that circum-
stances exist which render it necessary for him to take immediate
action to make a law for regulating the employment of private E
Security Guards employed in factories and establishments in the
State of Maharashtra and for making better provision for their
- y. terms and conditions of employment and welfare, through the
f' establishment of a Board therefor, and for matters connected
therewith ....... ". The long title of the Act is, "An Act for
regulating the employment of private Security Guards employed in F
·)'· factories and establishments in the State of Maharashtra and for
making better provisions for their terms and conditions of
employment and welfare, through the establishment of a Board
therefor, and for matters connected therewith." Sec. 1(4) makes the
Act applicable, "to persons who work as Security Guards in any
factory or establishment, but who are not direct and regular
employees of the factory or the establishment as the case may be." G
\--- Secs. 2(1), (3), (4), (5), (8) and (10) defines the expressions
"agency'', "employer", "establishment", "factory", "principal
employer" and "Security Guard" as follows:-

" "agency", or '~agent", in relation to a Security Guard, H

..
26 SUPREME COURT REPORTS [1987] 3 S.C.R. /
"
A means an individual or body of individuals or a body
Corporate, who undertakes to execute any security work or
watch and ward work for any factory or establishment by
engaging such Security Guard on hire or otherwise, or who
supplies such Security Guards either in groups or as an
individual, and includes a sub-agency or a sub-agent;
B
"employer", in relation to a Security Guard engaged by or
through an agency or agent, means the principal employer,
and in relation to any other Security Guard, the person
who has ultimate control over the affairs of the factory or

c
establishment and includes any other person to whom the
affairs of such factory or establishment are entmsted,
whether sµch person is called an Agent, Manager or by any
other name prevailing in the factory or establishment;
-
"establishment" means an establishment as defined in
clause (8) of section 2 of the Bombay Shops and Establish-
D ments Act, 1948;

"factory" means a factory as defined in clause (m) of section
2 of the Factories Act, 1948;

"prircipal employer" means an employer who has engaged
E Security Guards through an agency or agent;

"Security Guard" or "private Security Guard" means a . ,._
1
person who is engaged or is to be engaged through any ...
agency or an agent, whether for wages or not, to do secu-
rity work or watch and ward work in any factory or
F establishment and, includes any person, not employed by -._,,-
any employer or agency or agent, but working with the
permission of, or under an agreement with, the employer
or agency or agent, but does not include the members of
any employer's family or any person who is a direct and
regular employee of the principal employer;"
G

Section 3 empowers the State Government for the purposes of ensur- ~
ing an adequate supply and full and proper utilisation of Security
Guards in factories and establishments and generally for making better
provisions in the terms and conditions of employment of such workers,
H to make one or more schemes to provide for the registration of emp-
SECURITY GUARDS BOARD v. S. & P. SERVICE !REDDY. J.] 27

loyers and Security Guards in any factory or establishment and to A
provide for the terms and conditions of employment of registered
Security Guards and to make provisions for the general welfare of such
Security Guards. The matters in regard to which provisions may be
made in the scheme are also set out in sec. 3(2) (a) to (n). We may
mention that clause (d) of sec. 3(2) in particular relates to terms and
conditions of employment, including the rates of wages, hours of B
work, maternity benefit, over-time payment, leave with wages, provi-
.-" sion for gratuity and conditions as to weekly and other holdidays and
pay in respect thereof. We should also mention here that sec. 3(2)(g)
. provides that the scheme may prohibit, restrict or otherwise control the

-
employment of Security Guards to whom the scheme does not apply
and the employment of Security Guards by employers to whom the C
scheme does not apply. Sec. 3(3) provides that the scheme may further
provide for punishment for a contravention of any provision of the
scheme with imprisonment or with fine. Sec. 4 prescribes the proce-
dure for making, varying or revoking a scheme. Sec. 6 provides for the
constitution of a Board for the Security Guards in any area. Sec. 8
prescribes the powers and duties of the Board. Sec. 15 provides for the D
constitution of an Advisory Committee. Secs. 19, 20 and 21 provide for
the application of Workmen's Compensation Act, Payment of Wages
r Act and Maternity Benefit Act to Security Guards. Secs. 22 and 23 are
important. Sec. 22 provides for the preservation of existing rights and
privil,eges if they are more favourable and sec. 23 provide< for exemp-
tion from the provisions of the Act. These provisions are important E
for our present purposes. They are as follows:-

"22. Nothing contained in this Act shall affect any rights or
privileges, which any registered Security Guard employed
in any factory or establishment is entitled to, on the date on
.'1· which this Act comes into force, under any other law, con- F
tract, custom or usage applicable to such Security Guard, if
such rights or privileges are more favourable to him than
those to which he would be entitled under this Act and the
Scheme:

Provided that, such Security Guard shall not be G
entitled to receive any corresponding benefit under the
provisions of this Act and the Scheme.

23. The State Government may, after consulting the
Advisory Committee, by notification in the Official
Gazette, and subject to such conditions and for such period H

,..
28 SUPREME COURT REPORTS [1987] 3 S.C.R.

A as may be specified in the notification, exempt from the I
operation of all or any of the provisions of this Act or any }--.._
Scheme made thereunder, all or any class or classes of
Security Guards employed in any factory or establishment
or in any class or classes of factories or establishments, if in
the opinion of the State Government, all such Security
B Guards or such class or classes of Security Guards are in
the enjoyment of benefits, which are on the whole not less
favourable to such Security Guards than the benefits pro-
vided by or under this Act or any Scheme made there-
under:

c Provided that, before any such notification is issued,
the State Government shall publish a notice of its intention
to issue such notification, and invite objections and sugges-
-
tions in respect thereto and no such notification shall be
issued until the objections and suggestions have been con-
sidered and a period of one month has elapsed from the
D date of first publication of the notice in the Official
Gazette:

Provided further that, the State Government may, by
notification in the Official Gazette, at any time, for reasons
to be specified, rescind the aforesaid notification."
E
Pursuant to the powers conferred bys. 4 of the Act, the Govern-
ment of Maharashtra after consulting the Advisory Committee made
the Private Security Guards (Regulation of Employment and Welfare)
Scheme, 1981. Paragraph 11 of the Scheme requires the Board to
maintain (1) a register of employers, and (2) a Pool Register which
F shall be a register of Security Guards. Paragraph 12 empowers the
Board to arrange for the classification of Security Guards in suitable
categories as may be determined by it from time to time. Paragraph 14
requires 'every employer who has engaged private Security Guards on
the appointed day or at' any time thereafter to 'get himself registered
with the Board' by applying in the prescribed form. The employer of
G an establishment coming into existence after the commmencement of
the Scheme is required to apply for registration simultaneously with
the commencement of its business. Paragraph 1.5 requires 'any Secu-
rity Guard who was working on the appointed day or at any time
thereafter in the employment in the area to which the Scheme applies'
to 'apply to the Board' in the prescribed form. Paragraph 25 provides
H that every registered Security Guard shall be deemed to have accepted
SECURITY GUARDS BOARD v. S. & P. SERVICE !REDDY, i.J 29

the obligation of the Scheme. A registe1ed Security Guard in the pool A
who is available for work is required not to engage himself for employ-
ment under any registered employer unless he is allotted to that
employer by the Secretary of the Board. A registered Security Guard
in the pool who is available for work is further required to carry out
directions of the Board and to accept employment under any regis-
tered employer for which he is considered suitable by the Board. B
Paragraph 26 provides that every registered employer shall accept the
obligations of the Scheme. A registered employer is required not to
employ a Security Guard other than a Security Guard whO has been
allotted to him by the Secretary. A registered employer is however at

-- liberty to employ Security Guard directly. A registered employer is
required to disburse to the Security Guard the wages and other C
allowances directly, if so directed by the Board and send to the Board
a statement of such payment within the prescribed time. Paragraph 27
prohibits the employment by a registered employer of a Security
Guard unless the Security Guard is a registered Security Guard or a
directly employed Security Guard. Paragraph 29 makes detailed provi-
sion for wages, allowances and other conditions of service of Security D
Guards. Paragraph 30 provides for the disbursement .of wages and
other allowances to the Security Guards. Paragraph 31 provides for
r disciplinary procedure. Paragraph 32 prohibits the termination of
employment of registered Security Guard except in accordance with
the provisions of the Scheme. Paragraph 33 and paragraph 34 provide
for appeals and termination. Paragraph 35 provides. for revision. E
Paragraph 37 provides for the cost of operating the Scheme and makes
provision for amenities and benefits to the registered Security Guards.

It is obvious from s. I( 4) and the very definition of 'Security
Guard' that the Act and, therefore, the Scheme are not applicable to
persons who are direct and regular employees of a factory or establish- F
ment but are applicable only to persons working in any factory or~
establishment who are engaged or are to be engaged through an
agency or agent and to persons who though not emplqyed by the
employer or agency or agent are working with their permission or ·
under an agreement with them. Section 23, we have seen, provides fot '
exemption from the operation of all or any of the provisions of the Act G
or any scheme made thereunder of "all or any class or classes of
Security Guards employed in any factory or establishment or in any
class or classes of factories or establishments." The basic condition to
be satisfied is that the State Government should be of the opinion that
"all such Security Guards or such class or classes of Security Guards
are in the enjoyment of benefits, which are on the whole not less H

..
30 SUPREME COURT REPORTS [1987] 3 S.C.R. -

A favourable to such Security Guards than the benefits provided by or
under this Act or any Scheme.made thereunder." A close scrutiny of
s. 23, particularly in the light of s. 1(4) read with the definition of
'Security Guard', makes it clear that the exemption is not in respect of
an agency or an agent or even a factory or establishment but in respect
of all or any class or classes of Security Guards employed in any
B factory or establishment or in any class or classes of factories or
establishments. In other words, the exemption is in regard to 'Security
Guards', employed in any factory or establishment or in any class or
classes of factories or establishments. The exemption may be in res-
pect of all the Security Guards employed in a factory or establishment
or in a class or classes of factories or establishments or in respect of a
class or classes of Security Guards so employed. For example, all
c Security Guards employed in factory may be exempted or Security
Guards of a particular grade or doing a particular type of work in
factory may be exempted. Again all Security Guards ·employed in a
class of factories, say textile mills· may be exempted. All Security
Guards in all textile mills doing a particular type of workor drawing a
D particular scale of pay may be exempted. The correlationship of the Secu-
rity Guards or classes or Security Guards who may be exempted from
the operation of the Act is to the factory or establishment or class or
classes of factories or establishments in which' they work and not with
the agency or agent through and by whom they are employed. This
analysis has however no bearing on _the question of locus standi of the
E persons who may seek the intervention of the State Government by
the issue of notifications· for exemption. Obviously the Security
Guards or classes or Security Guards employed in a factory or
establishment may apply to the Government to exempt them from the
operation of the Act. Similarly Security Guards or classes qf Security
Guards employed in classes of factories or establishments may apply to
F the Government to exempt them from the operation of the Act. Again
a factory or an establishment or a class or classes of factories or
establishments may apply to the Government to exempt Security Guards
employed in their factories or establishments from the operation of the
Act. Though agencies or agents do not enter the picture directly, since
the very definition of Security Guards means , persons.
engaged or to be
G engaged through an agency or agent, it must follow that where Secu-
rity Guards have been engaged or are to be engaged through them in·
any factory or establishment or a class of factories or establishments,
such agency or agent may also .apply to the Government, not to
exempt all Security Guards engaged or to be engaged through them
but to exempt Security Guards ·engaged or to be engaged in a factory
H or establishment or a class of factories or establishments. The question is
SECURITY GUARDS BOARD v. S. & P. SERVICE [REDDY, J.) 31

not one of locus standi at all but which or what class of Security Guards A
are to be exempted from the operation of the Act and the Scheme.
Therefore, we are of the view that even an agency or agent may apply(
to the Government to grant exemption, but the exemption to be
granted by the Government is not to be of any agency or agent but:
only of Security Guards employed in a factory or establishment or ii
class or classes of factories or establishments. B

> One of the submissions of the learned counsel was that if s. 23
was read in the light of s. 22 it would follow that an agency could ask
for exemption from the operation of the Act of all Security Guards
employed through them. We do not see how that follows. All thats. 22

- provides in effect is that the rights or privileges of any registered C
Security Guard shall not be altered to his detriment. It only means that
if hitherto as an employee of the agency, the terms and conditions of
his services were more attractive on the whole than the terms and
conditions of service offered by the Act and the scheme under the
factory or establishment, the original terms and conditions of service
will be preserved and become applicable to their service under the D
factory or establishment. It was submitted by the learned counsel that
the Act and the Scheme did not provide for termination of the contract
of employment between the agency and the Security Guard or for the
transfer of the services of the Security Guards from the employment of
the Agency to that of the factory or establishment. We do not agree
with the submission. By necessary implication, the· services of the E

- ~ritYGuai-Cis"will·stand transferred to the service of the factory or
establishment on allotment to it by the Board. It is in that fashion,
among other things, that security of service is secured to the Security
Guards.

., The High Court appeared to think that all the applications were F
rejected on the ground that a policy decision had been taken not to
grant exemption in any case. The High Court relied on the affidavit of
Shri Rajadhyaksha. It was stated in the affidavit of Shri Rajadhyaksha
that the opinion of the Advisory Committee was sought on the applica-
tions for exemption and the Advisory Committee recommended the
applications of 21 applicants. Later the cases of four other applicants G
were recommended by the Labour Commissioner. After referring to
these circumstance~, Shri Rajadhyaksha stated in the affidavit.

"I say that after the receipt of the recommendations from
the Advisory Committee by the Department of Industries,
Energy and Labour, all the papers we'e submitted to the H
32 SUPREME COURT REPORTS [1987! 3 S.C.R.

Chief Minister through the Minister for Labour and the
A
Minister of State for Labour to consider whether to publish
· the notice of the Government's intention to issue such noti-
fication and invite objections and suggestions in respect
thereto. I say that after considering all the pros and cons
of the problem, the Hon'ble the Chief Minister, in consul-
B tation with the Hon'ble Minister for Labour and the Hon'-
ble Minister of State for Labour took the decision that
none of the agencies who had applied for exemption should
be granted exemption under s.23 of the said Act because
granting of such exemption will not be in the interest of the
Security Guards employed with the agencies."
c Later again Shri Rajadhyaksha stated; --
"I say that simply because the Advisory Committee bad
recommended the case for exemption, it was not obligatory
on the State Government to publish a notice of its intention
D to issue notification for exemption as alleged therein. I say
that it was for the Government to consider the entire mat-
ter and to decide whether such a notification should be
issued or not and if as a matter of policy and after going
through the entire case the Government decid.ed not to
grant exemption no exception can be taken to the decision
E of the State Government."

We do not read the affidavit of Shri Rajadhyaksha to say that there
was a predetermined policy decision pursuant to which all the applica-
tions for exemption were rejected without any consideration on
merits. What the deponent of the affidavit meant to say was that the
F merits of each case were fully considered and tile applications were
rejected because it was their policy not to grant exemption if it was not
in the interest of the Security Guards; A complaint was made that the
Government did not state its reasons for rejecting the applications for
exemption. We do not think that in cases of this nature where exemp-
tions are sought from the operation of the Act, it is necessary for the
G Government to state its reasons. Of course, if there is a charge of
mala-fides or arbitrariness, the court may look into it to discover if
there are any mala-fides or if the refusal of the Governm!'nt was
arbitrary. We do not think that the orders refusing to grant exemptions
in the present cases call for any interference on the sole ground of
failure to state reasons.
H ,
SECURITY GUARDS BOARD v. S. & P. SERVICE [REDDY, J.J 33

In the result all the appeals are allowed and the writ petitions A
filed in the High Court are dismissed. Civil Writ Petition No. 12319 of
1985 filed by one of the agencies in this Court is also dismissed. The
State of Maharashtra has also filed a special leave petition against the
judgment of the Bombay High Court. It is disposed of on the same
lines as the civil appeals.
B
On behalf of some of the Security Guards a writ petition was
filed in the Bombay High Court and it has been withdrawn to this Court
to be disposed of along with the appeals. One of the contentions raised
in the writ petition filed by the workmen is that the Scheme does not
- offer any continuity or guarantee of employment to those who-are
already working in factories or establishments having been engaged C
through agencies. We are assured by Shri K.K. Singhvi, learned
counsel for the Board that every individual registered Security Guard
who was previously working in a factory or establishment will be allot·
ted to the same factory or establishment and if the total package of the
terms and conditions of his suvice were better than the terms and
conditions of service offered by the Board such person should be emp· D
loyed on the previous terms and conditions of service. The assurance
of Shri Singhvi is made part of our order. The learned counsel for the
workmen also urged that there was an insistence upon payment of
'capitation fee' and sponsoring by a union before a Security Guard was
registered' under the Scheme. This, of course is not permissible under
the Act or the Scheme and whoever has been so insisting will desist E
from doing so.

P.S.S. Appeals allowed.