Summary
| Category | Data |
|---|---|
| Court | Supreme Court of India |
| Case Number | C.A. No.-000532-000532 – 2026 |
| Diary Number | 17773/2023 |
| Judge Name | HON’BLE MR. JUSTICE S.V.N. BHATTI |
| Bench |
HON’BLE MR. JUSTICE PANKAJ MITHAL HON’BLE MR. JUSTICE S.V.N. BHATTI |
| Precedent Value | Binding on all subordinate courts; persuasive for High Courts |
| Overrules / Affirms |
|
| Type of Law | Industrial / Labour Law |
| Questions of Law |
|
| Ratio Decidendi | The Court held that Section 12(1) expressly empowers a Conciliation Officer to intervene once an industrial dispute “exists or is apprehended,” and that neither the statute nor the conciliation manual makes a prior written demand a sine qua non, except in public utility services. The reference under Section 10(1) is an administrative act, not a judicial determination, and may be challenged if made without jurisdictional satisfaction but not for merits. Sham contracts must be decided by an Industrial Court under SAIL (2001) to determine if contract labourers are de facto employees of the principal employer. |
| Judgments Relied Upon |
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| Logic / Jurisprudence / Authorities Relied Upon by the Court |
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| Facts as Summarised by the Court | The Appellant employed CNC operators directly but used licensed contractors for ancillary work under CLRA. A union of contract labourers filed a conciliation application on 11 June 2019 without serving demands on the employer. Conciliation failed, leading to a Section 10(1) reference on 28 January 2020. The Management challenged maintainability for want of a prior demand. The High Court dismissed the challenge; appeal to Supreme Court ensued. |
Practical Impact
| Category | Impact |
|---|---|
| Binding On | All subordinate courts |
| Persuasive For | High Courts, Supreme Court bench considering industrial disputes |
| Overrules | None directly (distinguishes Sindhu Resettlement Corp. & Prabhakar on demand/rejection test) |
| Distinguishes |
|
| Follows |
|
What’s New / What Lawyers Should Note
- Conciliation under Section 12(1) of the ID Act may properly be initiated for “apprehended” disputes without any prior written or oral demand on the employer.
- The Conciliation Manual’s procedural directions are directory, not mandatory; a formal pre-conciliation meeting or demand notice is not a jurisdictional requirement.
- Section 10(1) reference is an administrative act and cannot be challenged on merits; only absence of jurisdictional satisfaction (no real dispute or apprehension) invites judicial review.
- Sham vs. genuine contract disputes must be determined by an Industrial Court under SAIL, and reliefs like direct employment or back wages flow only if a sham contract is proven.
- Parties cannot use preliminary objections to delay conciliation or reference; DP Maheshwari warns against protracted interlocutory skirmishes in labour disputes.
Summary of Legal Reasoning
- Interlocutory Delay Discouraged: Relying on DP Maheshwari, the Court stressed that tribunals should decide disputes expeditiously and not entertain peripheral preliminary objections that stall substantive resolution.
- Broad Definition of “Industrial Dispute”: Under Section 2(k), an “industrial dispute” includes any “dispute or difference,” which may be actual or apprehended, without prescribing a formal demand–rejection sequence.
-
Referral and Conciliation Powers:
- Section 10(1) empowers the Government to refer disputes (actual or apprehended) by administrative order.
- Section 12(1) allows a Conciliation Officer to commence proceedings once a dispute is registered; the statute does not mandate a prior charter of demands to the employer except in public utility services.
- Conciliation Manual Directory: Procedural guidelines in the Manual do not bind the statutory powers to admit disputes or frame proceedings.
- Sham Contract Doctrine: Applying Steel Authority of India, the Court held that whether a contract is a legitimate third-party engagement or a camouflage creating a de facto master–servant relationship is a disputed fact for the Industrial Court to decide.
Arguments by the Parties
Petitioner (Management)
- No industrial dispute existed as the union never served a charter of demands on the employer or obtained rejection.
- The Conciliation Officer admitted the dispute without preliminary inquiry into the union’s locus standi or validity of claims against a non-employer.
- Reference under Section 10(1) and conciliation report are illegal for want of statutory pre-conditions (relying on Sindhu and Prabhakar).
Respondent (Union / Contract Labourers)
- Formal demand–rejection is not a statutory precondition except for public utility services.
- Section 12(1) permits intervention in apprehended disputes to prevent industrial unrest.
- Contracts with licensed labour contractors were sham and camouflaged to deny workmen direct employment rights (relying on Shambu Nath Goyal, Cipla, SAIL).
- Preliminary objections by Management are tactics to delay remedy for unfair labour practices.
Factual Background
Between 2011 and 2020, Premium Transmission Pvt. Ltd. engaged computer numerical control operators directly but outsourced ancillary work to two licensed contractors under the Contract Labour (Regulation & Abolition) Act. On 11 June 2019, the Aurangabad union of dismissed contract labourers filed a conciliation application under Section 12, alleging sham contracting and unfair labour practices. Conciliation failed on 22 January 2020, and the Government referred the dispute to the Industrial Court on 28 January 2020. The Management challenged maintainability, which was rejected by the High Court, leading to this appeal.
Statutory Analysis
- Section 2(k), Industrial Disputes Act: Defines “industrial dispute” to include any “dispute or difference,” whether actual or apprehended, between employers and workmen, concerning employment terms or conditions.
- Section 10(1), ID Act: Authorises the appropriate Government to refer any existing or apprehended industrial dispute to adjudication by Labour Court or Tribunal by administrative order.
- Section 12(1), ID Act: Empowers a Conciliation Officer to mediate in any industrial dispute “which exists or is apprehended,” with no statutory requirement of prior demand–rejection except for public utility services.
- Section 33(1), ID Act: Prohibits employers from altering service conditions or punishing workmen to the prejudice of a pending dispute without express permission of the adjudicatory authority.
Alert Indicators
- Precedent Followed – Affirms Shambu Nath Goyal and SAIL for conciliation in apprehended disputes and sham contract doctrine.