STEEL AUTHORITY OF INDIA LTD. AND ORS. ETC. ETC. v. NATIONAL UNION WATER FRONT WORKERS AND ORS, ETC. ETC

Citation: [2001] SUPP. 2 S.C.R. 343

Court: Supreme Court of India

Bench: B.N. KIRPAL, S.S.M. QUADRI, M.B. SHAH, RUMA PAL, K.G. BALAKRISHNAN

Judgment text

STEEL AUTHORITY OF INDIA LTD. AND ORS. ETC. ETC. V. NATIONAL UNION WATER FRONT WORKERS AND ORS, ETC. ETC. AUGUST 30, 2001 [B. N. KIRPAL, SYED SHAH MOHAMMED QUADRI, M. B. SHAH, RUMA PAL AND K. G. BALAKRISHNAN, JJ. ] Contract Labour (Regulation and Abolition) Act, 1970 : Sections 1(4) & (5), 2(1) (a) (Before and After 1986 Amendment) 2 (1) fb) (c) (e) (g) & (i), 7 to 9, JO, 16 to 21 and 23 to 25. Contract Labour (Regulation and Abolition) Rules, 1971 : Rules 21 (2), 25(2) (VJ (a), 72 to 77, 81(3) 82(2) Forms LIL lll, JV. VJ, X! L XIV and llv. 'Appropriate Government'-Correct import ofexpression-Government Company-Appropriate Government in respect of-Who is-Determination of appropriate Government-Test laid down for pre-amendment and postamendment period.

"Appropriate Government"-Expression 'Any Industry carried on by or under the authority ofthe Central Government'-Scope and meaning of-Test to determine whether an industry was being carried out under the authority of Central Government laid down-The fact of being an instrumentality of p State is not determinative in this regard. Contract Labour-Central Government-Notification dated December 9, 1976 issued under Section 10(1)-Prohibition of employment of contract labour under the Notification-Notification held invalid for non-compliance with requirements o. fSection I0-Held there was non-application ofmind by Central Government-Notification quashed prospectively.

Contract labour-Absorption-Issue ofa valid Notification prohibiting contract labour-Effect of-Held provisions of Act neither expressly nor impliedly provide for automatic absorption ofcontract labour on issuance of a Notification-Position in this regard before and after enactment ofthe Ac/- Discussed-Consequences ofprohibition Notification issued under Section I0- Discussed. Constitution of India, 1950 : Articles 12, 14, 23, 38, 39, 43A and Preamble. State-Duty and obligation to improve the lot of the work force. Industrial Disputes Act, 1947: Section 2(a)-Scope of-Object ofAct.

Interpretation ofstatute-Duty ofCourt to give effect to clear and explicit language-Rule ofliteral interpretation-Distinction between public law and private law-Held not relevant in regard to interpretation of statutes- Applicability ofMischief Rule-Principle ofliberal construction ofbeneficial legislation-Applicability of Public law-Private law-Distinction between-Held not relevant in regard to interpretation of statutes. Labour law-Principles ofcontract law-Applicability to labour law. Words and Phrases : 'Authority'-Meaning of-Jn the context a/Section 2(1) (a) ofthe Contract Labour (Regulation and Abolition) Act, 1970.

In these appeals the following questions arose for consideration : (i) What is the true and correct import of the expression 'appropriate Government' as defined in clause (a) of sub-section (I) of Section 2 of the Contract Labour (Regulation and Abolition) Act, 1970; (ii) Whether the Notification dated December 9, 1976 issued by the Central Government under Section IO (I) of the C. L. R. A. Act prohibiting employment of contract labour in all establishments of the Central Government companies is valid and applies to all Central Government companies; and (iii) Whether automatic absorption of contract labour, working in the establishment of the principal employer as regular employees, follows on issuance of a valid notification under Section 10(1) of the C. L. R. A. Acl, prohibiting the contract labour in the concerned establishment. STEEL AUTHORITY OF INDIA LTD. 11. NATIONAL UNIONWATER FRONT WORKERS 345 Disposing of the appeals, the Court HELD : 1.

Clause (a) of sub-section (1) of Section 2 of the contract Labour (Regulation and Abolition) Act, 1970 defines the expression 'appropriate Government'. This clause was substituted by the Contract Labour (Regulation and Abolition) Amendment Act, 1986 with effect from January 28, 1986. The phrase "any industry carried on by or under the authority of the Central Government" is a common factor in both the unamended as well as the amended. definitions. 1364-E; 366-GJ 2. Before January 28, 1986 the determination of the question whether Central Government or the State Government is the appi:opriate Government in relation to an establishment, will depend, in view of the definition of the expression "appropriate Government" as it stood in the C. L. R. A.

Act, on the answer to a further question, is the industry under consideration carried on by or under the authority of the Central Government or does it pertain to any specified controlled industry; or the establishment of any railway, cantonment board, major port, mine or oil field or the establishment of banking or insurance company ? If the answer is in the affirmative, the Central Government will be the appropriate Government, otherwise in relation to any other establishment the Government of the State in which that other establishment is situated, will be the appropriate Government 1412-E-F] 3.

After the said date in view of the new definition of that expression, the answer to the question has to be found in clause (a) of Section 2 of the Industrial Disputes Act; if (i) the concerned Central Government company/ undertaking or any undertaking is included therein eo nomine, or (ii) any industry is carried on (a) by or under the authority of the Central Government, or (b) by railway company; or (c) by specified controlled industry, then the Central Government will be the appropriate Government otherwise in relation to any other establishment, the Government of the State in which that other establishment is situated, will be the appropriate Government. [412-G-H, 413-A] 4. The key word in the expression 'under the authority of the Central Government' is 'authority'.

This word is frequently used to express derivative power; and in this sense, it may be used as meaning instructions, permission, power delegated by one person to another, the result of the manifestations by the former to the latter of the former's consent that the latter shall act for him, authority in this sense has been similarly used as designating or meaning an agency for the purpose of carrying out a state duty or function : some one to whom by law a power has been given. It follows that the phrase "any _.. , industry carried on under the authority of the Central Government" implies an industry which is carried on by virtue of, pursuant to, conferment of, grant of, or delegation of power or permission by the Central Government to a Central Government Company or other Government company/undertaking. (368-G, 369-Cj Concise OxfordDictionary; Black's Law Dictionary; Corp~ Juris Secundum p. 1290; Words and Phrases p. 603, 606, 612 and 613, referred to. 5.

The function of the Court is to interpret the statute to ascertain the intent of the legislature-Parliament. Where the language of the Statute is clear and explicit the Court must give effect to it because in that case words of the Statute unequivocally speak the intention of the legislature. This rule of literal interpretation has to be adhered to and a provision in the Statute has to be understood in its ordinary natural sense unless the Court finds that the provision sought to be interpreted is vague or obscurely worded in which event the other principles of interpretation may be called in aid. A plain reading of the phrase "any industry carried on by or under the authority of Central Government" under interpretation, shows that it is lucid and clear. There is no obscurity, no ambiguity and no abstruseness. Therefore, the words used therein must be construed in their natural ordinary meaning as commonly understood. (366-H; 367-A] 6.

For purposes of enforcement of fundamental rights guaranteed in Part III of the Constitution the question whether a Government Company or undertaking is 'State' within the meaning of Article 12 is germane. The word 'State' is defined in Article 12. However, the fact of being instrumentality of a Central/State Government or being 'State' within the meaning of Article 12 of the Constitution cannot be determinative of the question as to whether an industry carried on by a Company/corporation or an instrumentality of the Government is by or under the authority of the Central Government for the purpose of or within the meaning of the definition of 'appropriate t- -~ Government' in the Act. [369-E-F; ~72-D-E] 7. The definition of 'establishment' in the Act takes in its fold purely private undertakings which cannot be brought within the meaning of Article 12 of the Constitution. In such a case how is 'appropriate Government' determined for the purposes of C. L. RA.

Act or Industrial Disputes Act ? The criterion is whether an undertaking/instrumentality of Government is carrying on an industry under the authority of the Central Government and not STEEL AUTHORITY OF INDIA LTD •·. NATIONAL UNION WATER FRONT WORKERS 347 ·whether the undertaking is instrumentality or agency of the Government for purposes of Article 12 of the Constitution, be it of Central Government or State Government. [372-H; 373-A-B] Sukhdev Singh and Ors. v. Bhagatram Sardar Singh Raghuvanshi andAnr. , [1975] 3 SCR 619; Ramanna Dayaram Shetty v. The international Airport Authority of India and Ors. , [1979] 3 SCR 1014; Managing Director U. P. Warehousing Corporation and Anr. v. Vinay Narayan Vajpayee, [1980) 2 SCR 773; Ajay Hasia etc. v. Khalid Mujib Sehravardi and Ors. etc. , [1981] 2 SCR 79; Delhi Transport Corpn. v. D. TC. Mazdoor Congress and Ors. , [1991) Suppl. l SCC 600; Som Prakash Rakhi v. Union ofIndia and Anr. , [1981] l SCC 449; Manmohan Singh Jaitla etc. v. Commr.

Union Territory ofChandigarh and Ors. etc. , (1984] Suppl. SCC 540; P. K. Ramachandra Iyer and Ors. etc. v. Union of India and Ors. etc. , [1984) 2 SCC 141; A. L. Kalra v. Project andEquipment Corpn. ofIndia Ltd, [1984) 3 SCC 316; Central Inland Water Transport Corpn. Ltd andAnr. etc. v. Brojo Nath Ganguly andAnr. etc. , [1986) 3 SCC 156; C. V. Raman v. Management of Bank ofIndia and Anr. etc. , [1988) 3 SCC 105; Lucknow Development Authority v. MK. Gupta, [1994] 1 SCC 243; Mis. Star Enterprises and Ors. v. City and Industrial Development Corpn. ofMaharashtra Ltd and Ors. [1990[ 3 SCC 280; LIC ofIndia and Anr. v. Consumer Education and Research Centre and Ors. , (1995] 5 SCC 482; G. B. Mahajan and Ors. v. Jalagaon Municipal Council and Ors. , [1991] 3 SCC 91, distinguished. 8.

There cannot be any dispute that all the Central Government companies in question are not and cannot be equated to Central Government though they may be 'State' within the meaning of Article 12 of the Constitution. Being the instrumentality or agency of the Central Government would not by itself amount to having the authority of the Central Government to carry on that particular industry. The Central Government will be the , p "appropriate Government" under the C. L. RA. Act and the 1. D. Act provided the industry in question is carried on by a Central Government company/an undertaking under the authority of the Central Government. Such an authority may be conferred, either by a Statute or by virtue of relationship of principal and agent or delegation of power. Where the authority, to carry on any industry for or on behalfofthe Central Government, is conferred on the Government company/any undertaking by the Statute under which it is created, no further question arises.

Bilt, if it is notso, the question that arises is whether there is any conferment of authority on the Government company/ any undertaking by the Central Government to carry on the industry in question. This is a question of factand lias to be ascertained on the facts and in the circumstances of each case. [373-C-G] Heavy Engineering Mazdoor Union v. State ofBihar and Ors. , (1969( I SCC 765; Mis. Hindustan Aeronautics Ltd v. The Workmen and Ors. , [1975) 4 SCC 679; Rashtriya Mill Mazdoor Sangh, Nagpur v. Model Mills, Nagpur and Anr. [1984) Suppl. SCC 443 and Food Corpn. ofIndia, Bombay and Ors. v. Transport and Dock Workers Union and Ors. , [1999] 7 SCC 59, referred fo. Air India Statutory Corpn. and Ors. v. United Labour Union and Ors. , [1997] 9 sec 377, overruled prospectively. 9.

The principle, while discharging public functions and duties the Government companies/corporations/societies which are instrumentalities or agencies of the Government must be subjected to the same limitations in the field of public law-Constitutional or administrative law-as the Government itself, does not lead to the inference that they become agents of the Central/ State Government for all purposes so as to bind such Government for all their acts, liabilities and obligations under various Central and/or State Acts or under private law. [372-C) IO. The contention that in construing the provisions ofthe C. L. R. A. Act, the principle of literal interpretation has to be discarded as it represents common law approach applicable only to private law field and has no relevance when tested on the anvil of Article 14, and instead the principle of public law interpretation should be adopted, cannot be accepted.

To accept I that contention would amount to abandoning a straight route and oft treaded road in an attempt to create a pathway in a wilderness which can only lead astray. This C~urt has not come across any principles of public law interpretation as opposed to private law interpretation for interpreting a statute either in any authoritative treatise on interpretation of statutes or in pronouncement ofany court. However, there does exist a distinction between the public law and private law. The divide between the public law and private law is material in regard to the remedies which could be availed when enforcing the rights, public or private, but not in regard to interpretation of the statutes. [376-C, D, GI O'Reilly v. Mackman, 1983 (2) Appeal Cases 237 held inapplicable. Lord Woolf, The Second Harry Street Lecture, referred to. II. The definition of 'establishment' is given in Section 2(e) of the Act.

Reading the definition of 'establishment' the position that emerges is that before issuing a notification under Section 10(1) an appropriate Government STEEL AUTHORITY OF INDIA LTD. "· NATIONAL UNIONWATER FRONTWORKERS 349 is required to : (i) consult the Central Board/State Board; (ii) consider the conditions of work and benefits provided for the contract labour and (iii) take note of the factors such as mentioned in clauses (a) to (d) of sub-section (2) of Section 10, with reference to any office or department of the Government or local authority or any place where any industry, trade, business, manufacture or occupation is carried on. (380-F-G] 12. A glance through the impugned notification, makes it manifest that with effect from March 1, 1977, it prohibits employment of contract labour for sweeping, cleaning, dusting and watching of buildings owned or occupied by establishment in respect of which the appropriate Government under the said Act is the Central Government.

This clearly indicates that the Central Government had not adverted to any of the essentials, required under Section 10, except the requirement of consultation with the Central Advisory Board. Consideration of the essential factors has to be in respect of each establishment, whether individually or collectively, in respect of which notification under sub-section I of Section 10 is proposed to be issued. The impugned notification apart from being an omnibus notification does not reveal compliance with sub-section (2) of Section 10. This is exfacie contrary. to the. postulates of Section 10 of the Act. Besides it also exhibits non- . application of mind by the Central Government. Therefore, the impugned notification dated December 9, 1976 issued by the Central Government cannot be sustained. It is quashed prospectively, i. e.

from the date of this judgment and subject to the clarification that on the basis of this judgment no order passed or no action taken giving effect to the said notification on or before the date of this judgment, shall be called in question in any tribunal-court including a High Court if it has otherwise attained finality and/or it has been implemented. (381-D-F; 413-E, F] 13. Neither Section 10 of the C. L. R. A. Act nor any other provision in the Act, whether expressly or by necessary implication, provides for automatic absorption of contract labour on issuing a notification by appropriate Government under sub-section (1) of Section 10, prohibiting employment of contract labour, in any process, operation or other work in any establishment. Consequently the principal employer cannot be required to order absorption of the contract labour, working in the concerned establishment. (413-G] 14. On issuance of prohibitation notification under Section 10 of the C. L. R. A.

Act prohibiting employment of contract labour or otherwise, in an industrial dispute brought before it by any contract labour in regard to conditions of service, the industrial adjudicator will have to consider the question whether the contractor has been interposed either on the ground of having undertaken to produce any given result for the establishment or for supply of contract labour for work of the establishment under a genuine contract or is a mere ruse/camouflage to evade compliance of various beneficial legislations so as to deprive the workers of the benefit thereunder. Ifthe contract is found to be not genuine but a mere camouflage, the so-called contract labour will have to be treated as employees of the principal employer who shall be directed to regularise the services of the contract labour in the concerned establishment subject to the conditions as may be specified by it for that purpose in the light of para hereunder. (414-C-E] . 15.

Ifthe contract is found to be genuine and prohibition notification under Section 10(1) of the C. L. R. A. Act in respect of the concerned establishment has been issued by the appropriate Government, prohibiting employment of contract labour in any process, operation or other work of any establishment and where in such process, operation or other work of the establishment and the principal employer intends to employ regular workman he shall give preference to the erstwhile contract labour, if otherwise found suitable and, if necessary, by relaxing the condition as to maximum age appropriately taking into consideration the age of the workers at the time of their initial employment by the contractor and also relaxing the condition as to academic qualifications other than technical qualifications. [414-F-G] 16.

The expression "industrial adjudicator" has been used by design as determination of the questions aforementioned requires inquiry into disputed questions of facts which cannot conveniently be made by High Courts in exercise of Jurisdiction: under Article 226 of the Constitution. Therefore, in such cases the appropriate authority to go into those issues will be industrial tribunal/court whose determination will be amenable to judicial review. [414-H; 415-AJ 17. By definition the term 'contract labour's is a species of workman. Where a workman is hired in or in connection with the work of an establishment by the principal employer through a contractor, he merely acts as an agent so there will be master and servant relationship between the principal employer and the workman.

But where a workman is hired in or in connection with the work of an establishment by a contractor either because he has undertaken to produce a given result for the establishment or because he supplies workman for any work of the establishment, a question might arise whether the contractor is a mere camouflage. If the answer is in the affirmative, the workman will be in fact an employee of the principal employer STEEL AUTHORITY OF INDIALTD. '·NATIONAL UNION WATER FRONTWORKERS ) 51 but if the answer is in the negative, the workman will be a contract labour. [391-E, G, H; 392-H] Hussainbhai Calicut v. The Alath Factory Thozhilali Union, Kozhikode and Ors. , [19781 4 SCC 257 and Indian Petrochemicals Corporation Ltd and Anr. v. Shramik Sena and Ors. , [19991 6, SCC 439, referred to. 18. For interpretation of relevant provisions of the Act reference to Mischief Rule is apposite. Craise on Statute Law 6th Edition, by S. G. G. Edgar p. 96, referred to. Re mayfair Property Co.

1898 (2) Ch 28, Heydon's case 1584 (3) Co. Rep. 7A, referred to. 19. The C. L. R. A. Act was enacted by the Parliament to deal with the abuses ofcontract labour system. The Parliament has adopted twin measures to curb the abuses of employment of contract labour-the first is to regulate employment of contract labour suitably and the second is to abolish it in certain circumstances. This approach is clearly discernible from the provisions of the C. L. R. A. Act. (360-EI 20. The consequence of prohibition notification under Section 10(1) of the C. L. R. A. Act prohibiting employment of contract labour, is neither spelt out in Section 10 nor indicated anywhere in the Act. The following consequences follow on issuing a notification under Section 10(1) of the C. L. R. A.

Act : (1) Contract labour working in the concerned establishment at the time of issue of notification will cease to function; (ii) the contract of principal employer with the contractor in regard to the contract labour comes to an end; (iii) no contract labour can be employed by the principal employer in any process, operation or other work in the establishment to which the notification relates at any time thereafter; (iv) the contract labour is not rendered unemployed as is generally assumed but continues in the employment ofthe contractor as the notification does not sever the relationship of master and servant between the contractor and the contract labour; (v) the contractor can utilise the services of the contract labojir in any other establishment in respect of which no notification under Section 10(1) has been issued where all the benefits under the C. L. R. A.

Act which were being enjoyed by it, will be available; (vi) if a contractor intends to retrench his contract labour he can do so only in conformity with the provisions of the ID Act. [390-F, G-H; 391-A-C] 21. The problems and the abuses resulting from engagement ofcontract labour had attracted the attention of the Government from time to time. In 1931 the Royal Commission (also known as 'Whitley Commission') submitted its report mentioning about existence of intermediary named "jobber", and recommended certain measures to reduce the influence of the 'jobber'. Nothing substantial turned on that. In 1946 Rage Committee recognised need for contract labour yet urged for its abolition where it was possible and recommended for regulating conditions of service where its continuance was unavoidable.

A careful reading of the recommendation made in 1956 by the second Planning Commission shows that though it was not unmindful of the fact that abolition of the contract labour system would result in displacement of labour, yet what it thought fit to recommend was alternative employment and not absorption in the establishment where the contract labour was working. In 1969, the National Commission submitted its report recording the finding that the contract labour system should be abolished. In its report the Commission noticed the fact of introduction of 'The Contract Labour (Regulation and Abolition) Bill, 1967, in the Parliament, which incorporated to a great extent its recommendations. The Bill later became the C. L. R. A. Act. Inspite of absence of a provision for absorption of contract labour in the Bill (on issuance of notification under Section 10(1) of the C. L. R. A. Act prohibiting engagement of contract labour), the National Commission endorsed that measure.

Neither in the main report of the Joint Committee of the Parliament on the said Bill nor in the dissent note, there is any reference to the automatic absorption of the contract labour. [394-E-G; 395-E; 396-D[ 22. The Statement of objects and reasons of the Act also does not allude to the concept of automatic absorption of the contract labour on issuance of notification for prohibition of the employment of the contract labour. The provisions of the Act clearly bespeak treatment of contract labour as employees of the contractor and not of the principal employer. - (396-H; 398-A] 23. The eloquence of the Act in not spelling out the consequence of abolition ofcontract labour system appears to be that the Parliament intended to create a bar on engaging contract labour in the establishment covered by the prohibition notification by a principal employer so as to leave no option with him except to employ the workers as regular employees directly.

Section 10 is intended to work as a permanent solution to the problem rather than to provide a one time measure by departmentalizing the existing contract labour who may, by a fortuitous circumstance be in a given establishment for a very STEEL AUTHORITY OF INDIALTD. v. NATIONAL UNIONWATERFRONTWORKERS 353 short time as on the date of the prohibition notification. It could as well be that a contractor and his contract labour who were with an establishment for a number of years were changed just before the issuance of prohibition notification. In such a case there could be no justification to prefer the contract labour engaged on the relevant date over the contract labour employed for longer period earlier.

Therefore, it cannot be received that in Section 10 there is any implicit requirement of automatic absorption of contract labour by the principal employer in the concerned establishment on issuance of notification by the appropriate Government under Section 10(1) prohibiting employment of contract labour in a given establishment [398-B, E, F) The Standard-Vacuum Refining Co. ofIndia Ltd. v. Its Workman and Ors. , [1960] 3 SCR 466, explained and distinguished. Vegoils Pvt. Ltd. v. The Workmen, (1971] 2 SCC 724 and Mis. Gammon India Ltd. and Ors. v. Union of India and Ors. , (1974) l SCC 596; R. K. Panda and Ors. v. Steel Authority ofIndia and Ors. , [1994) 5 SCC 304, distinguished. Dena Nath and Ors. v. National Fertilisers Ltd and Ors. , (1992) l SCC 695, followed. B. H. E. L. Workers' Association, Hardwar and Ors. etc. v. Union of India and Ors. etc. , [1985] l SCC 630; Mathura Refinery Mazdoor Sangh through its Secretary v. Indian Oil Corpn.

Ltd, Mathura Refinery Project, Mathura andAnr. , (1991) 2 SCC 176; National Federation ofRailway Porters, Vendors and Bearers v. Union ofIndia and Ors. , [1995) Supp. 3 SCC 152; Association ofChemical Workers, Bombay v. A. L. Alaspurkar and Ors. , [1993) Supp. 3 SCC 248 and Gujarat Electricity Board, Thermal Power Station, Ukai, Gujarat v. Hind Mazdoor Sabha and Ors. , [1995) 5 SCC 27, referred to. Air India Statutory Corpn. and Ors. v. United Labour Union and Ors. , [1997) 9 sec 377, overruled prospectively. 24. The principle that a beneficial legislation needs to be construed liberally in favour of the class for whose benefit it is intended, does not extend to reading in the provisions of the Act what the legislature has not provided whether expressly or by necessary implication, or substituting remedy or benefits for that provided by the legislature.

The intendment of the Act is that it regulates the conditions of service of the contract labour and authorises in Section 10(1) prohibition of contract labour system by the appropriate Government on consideration of factors enumerated in sub-section (2) of Section IO of the Act among other relevant factors. But, the presence of some of all those factors, provides no ground for absorption of contract labour on issuing notification under sub-section (1) of Section IO.

Admittedly when the concept of automatic absorption ofcontract labour as a consequence ofissuing notification under Section IO(l) by the appropriate Government, is not alluded to either in Section IO or at any other place in the Act and the consequence of violation of Sections 7 and 12 of the Act is explicitly provided in Sections 23 and 25 of the Act, it is not for the High Courts or this Court to read in some unspecified remedy in Section IO or substitute for penal consequences specified in Sections 23 and 25 a different sequel, be it absorption of contract labour in the establishment of principal employer or a lesser or a harsher punishment. Such an interpretation of the provisions of the statute will be far beyond the principle of ironing out the creases and the scope of interpretative legislation and as such clearly impermissible. [405-B-E) V. S. T Industries Ltd v. V. S. T Industries Workers' Union and Anr. , [2001) l SCC 298; G. B.

Pant University ofAgriculture and Technology, Pant Nagar, Nainital v. State ofUP. and Ors. , [2000) 7 SCC I09; Union ofIndia and Ors. v. Mohammed Aslam and Ors. , [2001] l SCC 720 and The Saraspur Mills Co. Ltd v. Ramanlal Chimanlal and Ors. , (1974] 3 SCC 66, distinguished. 25. There is no substance in the submission that a combined reading ofthe definition ofthe terms' contract labour', 'establishment' and 'workman' would show that a legal relationship between a person employed in an industry and the owner of the industry is created irrespective of the fact as to who brought about such relationship. (410-8] 26. The word 'workman' is defined in wide terms. It is generic term of which contract labour is a species. It is true that a combined reading of the terms 'establishment' and 'workman' shows that a workman engaged in an establishment would have direct relationship with the principal employer as a servant of master.

But what is true of a workman could not be correct · of contract labour. [4IO-C] 27. The contention that a workman, who is not an out-worker, must be treated as a regular employee of the principal employer cannot be acceded to. An out-worker falls within the exclusionary clause of the definition of 'workman'. The word 'out worker' connotes a person who carries out the type of work, mentioned in sub-clause (C) ofclause (i) of Section 2, ofthe principal employer with the materials supplied to him by such employer either (i) at his home or (ii) in some other premises not under the control and management of principal employer. A person who is not an out worker but satisfies the STEEL AUTHORITY OF INDIA LTD. '·NATIONAL UNION WATERFRONTWORKERS ) 55 requirement of the first limb of the definition of 'workman' would by the very definition, fall within the meaning of the term 'workman'.

Even so, if such a workman is within the ambit of the contract labour, unless he falls within the afore-mentiimed classes, he cannot be treated as a regular employee of the principal employer. [410-E-F] 28. Neither the provisions of the C. L. RA. Act contemplate creation of direct relationship of master and servant between the principal employer and the contract Jabour nor can such relationship be implied from the provisions of the Act on issuing notification under Section 10(1) of the C. L. RA~ Act, afortiorari much less can such a relationship be found to exist from the Rules and the Forms made thereunder. [410-H; 411-A] The Maharashtra Sugar Mills Ltd v. The State ofBombay and Ors. , AIR (1961) SC 313; Shivnandan Sharma v. The Punjab National Bank Ltd, [1965] 1 SCR 1427; Basti Sugar Mills Ltd v. Ram Ujagar and Ors. , [1964) 2 SCR 838 and Hussainbhai Calicut v. The Alath Factory Thezhilali Union, Kozhikode and Ors. , [1978] 4 SCC 257, explained and distinguished. 29.

The contention that the principles of contract law stricto senso do not apply to the labour and management is too broad to merit acceptance. [411-8] Western India Automobiles Assn. v. The Industrial Tribunal, Bombay and Ors. , AIR (36) (1949) Federal Court 1I I; The Bharat Bank Ltd Delhi v. Employees ofthe Bharat Bank Ltd. Delhi and Anr. , (1950) SCR 459 and Bharat Fritz Werner Ltd. etc. etc. v. State ofKarnatakaJ. T. , (2001) 2 SC 376, referred to. Raj Bahadur Diwan Badri Das v. The Industrial Tribunal, Punjab, (1963] 3 SCR 930 and Uptron India Ltd v. Shammi Bhan andAnr. , [1998] 6 SCC 538, distinguished. 30. The history of exploitation of labour is as old as the history of civilization itself. There has been an ongoing struggle by labourers and their organisations against such exploitation but it continues in one form or the other.

The Industrial Disputes Act, 1947 is an important legislation in the direction of attaining fair treatment to labour and industrial peace which are sine qua non for sustained economic growth of any country. [359-D-E] Life Insurance Co1poration ofIndia v. D. J. Bahadur and Ors. , [19811 l sec 315, referred to. 31. After the advent of the Constitution of India, the State is under an obligation to improve the lot of the work force. For this purpose Constitution of India contains various provisions. The Preamble to the Constitution is the lodestar and guides those who find themselves in a grey area while dealing with its provisions. In interpreting a beneficial legislation enacted to give effect to directive principles of the state policy which is otherwise constitutionally valid, the consideration of the Court cannot be divorced from those objectives.

In a case of ambiguity in the language of a beneficial labour legislation, the Courts have to resolve the quandary in favour of conferment of, rather than denial of, a benefit on the labour by the legislature but without rewriting and/or doing violence to the provisions of the enactment. 1359-H; 360-C-D] CIVIL APPELLATE JURISDICTION Civil Appeal Nos. 6009- 6010 of 2001. From the Judgment and Order dated 3. 7. 98 of the Calcutta High Court in W. P. No. 1773/94 and FMAT No. 1460 of 1994. WITH C. A. Nos. 6011, 6012/2001, T. C. No. 1, 5-7, 14, 17 and 18/2000 C. A. Nos. 719-720/200 I, 5798-99/98, 6013-6022, 6023/200 I, 4188-94, 4195/98, 6024-6025/2001, T. P. (C) No. 169, 284-302/2000. C. A. Nos. 6029, 6030- 6034/2001, T. P. (C) No. 308-337 of 2000 and C. A. No. 14112001. Harish N. Salve, Solicitor General, K. N. Raval, Additional Solicitor General, G. L. Sanghi, Ms. Indira Jaisingh, K. K. Venugopal, B. Sen, C. S. Vaidyanathan, Shanti Bhushan, Ranjit Kumar, Jitendra Sharma, K. K.

Singhvi, Ramesh P. Bhatt, T. R. Andhyarujina, P. S. Nair, Bhaskar P. Gupta, R. Venkataramani, Rajinder Sachar, Bhimrao Naik, Nageshwara Rao, Sunil Kr. Jain, Vijay Hansaria, A. K. Sahi, M. P. Sharma, Manish Kumar, J. K. Bhatia, K. P. S. Chani, Subra Jyoti Borthakur, Ms. Jaya Tomar, Amitesh Lal, Ms. Sushma Sharma, K. Rajeev, Ajit Pudussery, Rakesh K. Khanna, Ms. Pallavi Chaudhary, Ms. Anuradha Joshi, Surya Kant, M. B. Buch, J. K. Bhatia, K. V. Sreekumar, Ms. Asha Jain Madan, Mukesh Jain, Sushi! K. Pathak, S. Ravindra Bhat, Bharat Sangal, Sanjay Ghosh, Ms. Manjula Gupta, Ms. Sangeeta Panickar, Ms. Nina Gupta, Uday Gupta, Ms. Jaya Shrivastava, Ms. Aripta Mahajan, Vineet Kumar, Ms. Chama Mookerji, Anupam Mookerji, Pranab Kumar Mullick, Sanjay Kumar Pathak, Tara Chandra Sharma, Ajay Sharma, Rajeev Sharma, Pijush K. Roy, Ranjan Mukherjee, D. Mahesh Babu, Ms. Meenakshi Vij, K. T. Anandaraman, P. N. Jha, Sanjay Kapur, Ms. Shubhra STEEL AUTHORITY OF INDIA LTD.

'"NATIONAL UNION WATER FRONTWORKERS [QUADRI, l. ) J57 Kapur, P. H. Parekh, E. R. Kumar, Zulfikar Kumar, S. K. Singhvi, Ms. Asha Pathak, Ms. Jane Cox, P. K. Manohar, A. S. Chahil, Ms. S. Janani; Vijayendra Misra, Binay Kumar Das, Anil Kumar Jha, B. K. Satija, K. M. Patel, Ms. Sangeeta Kumar, Anil Nauriya, Ms. Hemantika Wahi, Arvind Kumar Sharma, (NP), S. R. Setia, K. V. Sree Kumar, Suresh S. Pakale, Ajay Majithia, Sanjay Singhvi, B. N. Singhvi, Yash Pal Dhingra, Anil Sachthey, Ms. Sandhya Rajpal, Arijit Prasad, Abhijit Sengupta, R. R. Chandrachud, A. N. Singh, Sanjay Parikh, Avijit Bhattacherjee, H. Devarajan, Rajiv Nanda, D. S. Mahra, Y. P. Mahajan, B. V. Bairam Das, Rakesh Shukla, C. Radhakrishna, Praveen Kumar, Ms. Anita Shenoy, Swapan Banerjee for the appearing parties. The Judgment of the Court was delivered by SYED SHAH MOHAMMED QUADRI, J. Leave is granted in the Special Leave petitions. In Food Corporation ofIndia. Bombay and Ors. v. Transport and Dock 1 Workers Union and Ors.

, a two-Judge Bench of this Court, having noticed the conflict of opinion between different Benches including two three-Judge Benches of this Court on the interpretation of the expression "appropriate Government" in Section 2(1)(a) of the Contract Labour (Regulation and Abolition) Act, I970 (for short, 'the CLRA Act') and in Section 2(a) of the Industrial Disputes Act, 1947 (for short, 'the LO. Act') and having regard to the importance of the question of automatic absorption of the contract labour in the establishment ofthe principal employer as a consequence of an abolition notification issued under Section 10(1) of the CLRA Act, referred these cases to a larger Bench. The other cases were tagged with the said case as the same questions arise in them also. That is how these cases have come up before us. To comprehend the controversy in these cases, it will suffice to refer to the facts in Civil Appeal Nos. 6009-10 of 2001@ S. L. P. Nos.

12657- 12658 of 1998 which are preferred from the judgment and order of the Calcutta High Court in W. P. No. 1773of1994 and FMAT No. 1460of1994 dated July 3, 1998. The appellants, a Central Government Company and its branch manager, are engaged in the manufacture and sale of various types of iron and steel materials in its plants located in various States of India. The business of the appellants includes import and export of several products and bye-products through Central Marketing Organisation, a marketing unit of the appellant, having network of branches in different parts of India. The work of handling the goods in the stockyards of the appellants, was being 1. [I 999) 1 sec 59. entrusted to contractors after calling for tenders in that behalf.

The Government of West Bengal issued notification dated July 15, 1989 under Section 10(1) ofthe CLRA Act (referred to in this judgment as 'the prohibition notification') prohibiting the employment of contract labour in four specified stockyards of the appellants at Calcutta. On the representation of the appellants, the Government of West Bengal kept in abeyance the said notification initially for a period of six months by notification dated August 28, 1989 and thereafter extended that period from time to time. It appears that the State Government did not, however, extend the period beyond August 31, 1994. The first respondent-Union representing the cause of 353 contract labourers filed Writ Petition No.

I0I08/89 in the Calcutta High Court seeking a direction to the appellants to absorb the contract labour in their regular establishment in view of the prohibition notification of the State Government dated July 15, 1989 and further praying that the notification dated August 28, 1989, keeping the prohibition notification in abeyance, be quashed. A learned Single Judge of the High Court allowed the writ petition, set aside the notification dated August 28, 1989 and all subsequent notifications extending the period and directed that the contract labour be absorbed and regularised from the date of prohibition notification - July 15, 1989 - within six months from the date of the judgment i. e. , April 25, 1994. The appellants adopted a two-pronged attack strategy. Assailing the said judgment of the learned Single Judge, they filed writ appeal (FMAT No. 1460 of 1994) and challenging the prohibition notification of July 15, 1989 they filed Writ Petition No.

1733 of 1994 in the Calcutta High Court. While these cases were pending before the High Court, this Court delivered judgment in Air India Statuto1y Corporation and Ors. v. United Labour 1 Union and Ors. holding, inter alia, that in case of Central Government Companies the appropriate Government is the Central Government and thus upheld the validity of the notification dated December 9, 1976 issued by the Central Government under Section I0( I) of the CLRA Act prohibiting employment of contract labour in all establishments ofthe Central Government Companies. On July 3, 1998, a Division Bench of the High Court nonetheless dismissed the writ appeal as well as the writ petition filed by the appellants taking-the view that on the relevant date "the appropriate Government" was the State Government. The legality of that judgment and order is under challenge in these appeals. Three points arise for determination in these appeals : 2. [t997J 9 sec 377 STEEL AUTHORITY OF INDIA LTD.

'· NATIONAL UNION WATERFRONT WORKERS [QUADRI, J. ] J59 (i) what is the true and correct import of the expression "appropriate government" as defined in clause (a) of sub-section (I) of Section 2 of the CLRA Act; (ii) whether the notification dated December 9, 1976 issued by the Central Government under Section 10(1) of the CLRA Act is valid and applies to all Central Government companies; and (iii) whether automatic absorption of contract labour, working in the establishment of the principal employer as regular employees, follows on issuance of a valid notification under Section 10(1) of the CLRA Act, prohibiting the contract labour in the concerned establishment. Inasmuch as in some appeals the principal employers are the appellants and in some others the contract labour or the union of employees is in appeal, we shall refer to the parties in this judgment as the principal employer and the contract labour.

Before taking up these points, it needs to be noticed that the history of exploitation of labour is as old as the history of civilisation itself. There has been an ongoing struggle by labourers and their organisations against such exploitation but it continues in one form or the other. The Industrial Disputes Ac,t, 1947 is an important legislation in the direction of attaining fair treatment to labour and industrial peace which are sine qua non for sustained economic growth of any c. ountry. The best description pf that Act is given by Krishna Iyer, J, speaking for a three-Judge Bench of this Court in Life Insurance Corporation ofIndia v. D. J. Bahadur and Ors.

,' thus : "The Industrial Disputes Act is a benign measure which seeks to preempt industrial tensions, provide the mechanics of dispute-resolutions and set up the necessary infrastructure so that the energies of partners in production may not be dissipated in counter-productive battles and assurance of industrial 'justice may create a climate of goodwill". After the advent of ihe Constitution of India, the State is under an obligation to improve the lot of the work force. · Article 23 prohibits, inter alia, begar and other similar forms of forced labour. The Directive Principle of State Policy incorporated in Article 38 mandates the State to secure 3. 11998] 1 sec 315. social order for promotion of welfare of the people and to establish an egalitarian society. Article 39 enumerates the principles of policy of the State which include welfare measures for the workers.

The State policy embodied in Article 43 mandates the State to endeavour to secure, by a suitable legislation or economic organisation or in any other way for all workers, agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities. Article 43A enjoins on the State to take steps by suitable legislation or in any other way to secure the participation of workers in the management of undertakings, establishment, or other organisations engaged in any industry. The fundamental rights enshrined in Articles 14 and 16 guarantee equality before law and equality of opportunity in public employment. Of course, the preamble to the Constitution is the lodestar and guides those who find themselves in a grey area while dealing with its provisions.

It is now well settled that in interpreting a beneficial legislation enacted to give effect to directive principles of the state policy which is otherwise constitutionally valid, the consideration of the Court cannot be divorced from those objectives. Jn a case of ambiguity in the language of a beneficial labour legislation, the Courts have to resolve the quandary in favour of conferment of, rather than denial of, a benefit on the labour by the legislature but without rewriting and/or doing violence to the provisions of the enactment. The CLRA Act was enacted by the Parliament to deal with the abuses ofcontract labour system. ' It appears that the Parliament adopted twin measures to curb the abuses of employment of contract labour - the first is to regulate employment of contract labour suitably and the second is to abolish it in certain circumstances. This approach is clearly discernible from the provisions of the CLRA Act which came into force on February 10, 1971.

A perusal of the Statement of Objects and Reasons shows that in respect of such categories as may be notified by the appropriate Government, in the light of the prescribed criteria, the contract labour will be abolished and in respect of the other categories the service conditions of the contract labour will be regulated. Before concentrating on the relevant provisions of the CLRA Act, it may be useful to have a bird's eye view of that Act. It contains seven chapters. Chapter 1 has two sections; the first relates to the commencement and application of the Act and the second defines the terms used therein. Chapter II which has three sections provides for the constitution of a Central Advisory· Board by the Central Government and a State Advisory Board by the State Government and empowers the Boards to constitute various committees. Chapter Ill contains regulatory provisions for registration of establishments STEEL AUTHORITY OF INDIA LTD. '· NATIONAL UNION WATERFRONT WORKERS [QUADRI, J.

] J61 which employ contract labour. Section I0 which prohibits the employment of contract labour falls in this chapter; we shall revert to it presently. Chapter IV contains provisions for purposes of licensing of Contractors to make sure that those who undertake or execute any work through contract labour, adhere to the terms and conditions of licences issued in that behalf. Power is reserved for revocation, suspension and amendment of licenses by the Licensing Officer and a provision is also made for appeal against the order of the Licensing•• Officer.

Chapter V takes care of the welfare and health of contract labour obliging the appropriate Government to make rules to ensure that the requirements of canteen, rest-rooms and other facilities like sufficient supply ofwholesome drinking water at convenient places, sufficient number of latrines and urinals accessible to the contract labour in the establishment, washing facilities and the first aid facilities, are complied with by the contractor. Where the contractor fails to provide these facilities the principal employer is enjoined to provide canteen, rest-rooms etc. , mentioned above, for the benefit of the contract labour. Though the contractor is made responsible for payment of wages to each worker employed by him as contract labour before the prescribed period yet for effective implementation of this requirement, care is taken to ensure presence of a nominee of the principal employer at the time of the disbursement of wages.

Here again, it is prescribed that if the contractor fails to pay the wages to the contract labour, the principal employer shall pay the full wages or unpaid wages, as the case may be, to the contract labour and a right is conferred on him to recover the same from the amount payable to the contractor; if however, no amount is payable to him then such amount is treated as a debt due by the contractor to the principal employer. Chapter VI deals with the contravention ofthe provisions ofthe Act, prescribes offences and lays down the procedure for prosecution ofthe offenders. Chapter VII is titled 'miscellaneous' and it contains eight sections which need not be elaborated here. Now we shall advert to point No. I. The learned Solicitor General for the appellant - principal employer has conceded that the State Government is the appropriate Government in respect ofthe establishments ofthe Central Government companies in question. Mr.

Shanti Bhushan, the learned senior counsel appearing for the respondents - contract labour in these appeals, submitted that in view of the concession made by the learned Solicitor General, he would not address the Court on that aspect and prayed that the judgment and order of the High Court, under appeal, be confirmed. }{ Mr. G. L. Sanghi, the learned senior counsel appearing for the appellants in the appeals filed by the Food Corporation oflndia (FCI)- principal employerand Mr. K. K.

Venugopal, the learned senior counsel for the appellant - the principal employer - in the appeals filed by the Oil and Natural Gas Commission (ONGC) among others sail with the learned Solicitor General, submitted that the appropriate Government on the relevant date was the State Government and for that reason the notification issued by the Central Government on December 9, 1976 was never sought to be applied to the establishments of FCl and ONGC but in view of the amendment of the definition of the expression, "appropriate Government" with effect from January 28, I986, the Central Government would thereafter be the appropriate Government. The learned Additional Solicitor General who appeared for Indian Farmers and Fertiliser Co-operative Ltd. ( IFFCO) and Mr. B. Sen, the learned senior counsel appearing for the appellant, adopted the arguments of the learned Solicitor General on this point. Ms.

Indira Jaisingh, the learned senior counsel appearing for the contract labour (respondents in the appeals filed by FCI), argued that in the case of FCI the appropriate Government before and after the notification issued by the Central Government on January 28, 1986, was the Central Government. Mr. K. K.

Singhvi, the learned senior counsel for the contract labour (respondents in the appeal of ONGC), has argued that all Central Government Undertakings which fall within the meaning of "other authorities" in Article 12 are agents or instrumentalities of the State functioning under the authority of the Central Government, as such the Central Government will be the appropriate Government; the Heavy Engineering's case was wrongly decided by the two Judge Bench of this Court which was followed by a three-Judge Bench in the cases ofHindustan Aeronautics Ltd and Rashtriya Mill Mazdoor Sangh; in those cases the judgments of this Court in Sukhdev Singh's case, Ajay Hasia's case, Central Inland Water Transport Corporation's case, C. V. Raman's case and R. D. Shetty International Airport's case were not considered; the approach of the Court in the Heavy Engineering's case was based on private law interpretation and that the approach of the Court ought to be based on public law interpretation.

It is submitted that in a catena of decisions of this Court, it has been held that where there is deep and pervasive control, company registered under the Companies Act or a society registered under the Societiei; Act would be 'State' and, therefore, it would satisfy the requirement of the definition of "appropriate Government". He contended that in Air India's case (supra) a three-Judge Bench ofthis Court had correctly STEEL AUTHORITY OF INDIA LTD. " NATIONAL UNION WATERFRONT WORKERS (QUADRI. J. ] 363 decided that for all the establishments ofthe Air India the Central Government was the appropriate Government, which deserved to be confirmed by us. Notwithstanding the concession made by the learned Solicitor General which has the support of Mr. Shanti Bhushan, we cannot give a quietus to this issue as the other learned counsel strenuously canvassed to the contra. We, therefore, propose to decide this point in the light of the contentions put forth by the other learned counsel.

To begin with the relevant provisions of Section I of the CLRA Act which deals, inter alia, with its extent and application, may be noticed here: "Section I - (I) to (3) *** *** *** (4) - It applies - (a) to every establishment in which twenty or more workmen are employed or were employed on any day of the preceding twelve months as contract Jabour; (b) to every contractor who employs or who employed on any day of the preceding twelve months twenty or more workmen : Provided that the appropriate Government may, after giving not less than two months' notice of its intention so to do, by notification in the Official Gazette, apply the provisions of this Act to any establishment or contractor employing such number of workmen less than twenty as may be specified in the notification. (5) (a) It shall not apply to establishments in which work only of an intermittent or casual nature is performed.

(b) Ifa question arises whether work performed in an establishment is of an intermittent or casual nature, the appropriate Government shall decide the question after consultation with the Central Board . , or, as the case may be, a State Board, and its decision shall be final. Explanation : For the purpose ofthis sub-section, work performed in an establishment shall not be deemed to be of an intermittent nature -- (i) if it was performed for more than one hundred and twenty days in the preceding twelve months, or (ii) if it is of a seasonal character and is performed for more than sixty days in a year. " A perusal of this section brings out that CLRA Act applies to every establishment and every contractor of the specified description. However, the establishments in which work only of an intermittent or casual nature is performed are excluded from the purview of the Act.

We shall also refer to definitions of relevant terms in sub-section (I) of Section 2 which contains interpretation clauses. Clause (a) defines the expression "appropriate Government" thus : "2(1) In this Act, unless the context otherwise requires- (a) "appropriate Government" means - (i) in relation to an establishment in respect of which the appropriate Government under the Industrial Disputes Act, 1947 (14of1947) is the Central Government, the Central Government; (ii) in relation to any other establishment, the Government of the State in which that other establishment is situated. " Addressing to the definition of "appropriate Government", it may be pointed out that clause (a) of Section 2(1) was substituted by the Contract Labour (Regulation and Abolition) Amendment Act, 1986 with effect from January 28, 1986. Before the said amendment, the definition read as under: "2(1).

(a) "appropriate Government" means- (i) in relation to any establishment pertaining to any industry carried on by or under the authority of the Central Government, or pertaining to any such controlled industry as may be specified in this behalf by the Central Government; or (ii) any establishment of any railway, Cantonment Board, major port, mine or oil-field, or (iii) any establishment of a banking or insurance company, the Central Government, (2) in relation to any other establishment the Government ofthe State in which that other establishment is situated. " IH STEEL AUTHORITYOF INDIA LTD. "·NATIONAL UNION WATER FRONT WORKERS [QUADRI, JJ J65 A plain reading of the unamended definition shows that the Central Government will be the appropriate Government if the establishment in question answers the description given in sub-clauses (i) to (iii).

And in relation to any other establishment, the Government of the State, in which the establishment in question is situated, will be the appropriate Government. So far as sub-clauses (ii) and (iii) are concerned, they present no difficulty. The discussion has centred round sub-clause (i). It may be seen that sub-clause (i) has two limbs. The first limb takes in an establishment pertaining to any industry carried on by or under the authority ofthe Central Government and the second limb embraces such controlled industries as may be specified in that behalf by the Central Government. Before embarking upon the discussion on the first limb, it will be apt to advert to the amended definition of' appropriate Government' which be. ars the same meaning as given in clause (a) of Section 2 of the Industrial Disputes Act, quoted hereunder: "2.

(a) "appropriate Government" means- (i) in relation to any industrial disputes concerning any industry carried on by or under the authority of the Central Government or by a railway company [or concerning any such controlled industry as may be specified in this behalf by the Central Government] or in relation to an industrial dispute concerning [a Dock Labour Board established · under section 5-A of the Dock Workers (Regulation of Employment) Act, 1948 (9of1948), or [the Industrial Finance Corporation oflndia Limited formed and registered under the Compani~s Act, 1956 (I of 1956)], or the Employees' State Insurance Corporation established under section 3 of the Employees' State Insurance Act, 1948 (34 of 1948), or the Board of Trustees constituted under section 3-A of the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948 (46 of 1948), or the Central Board of Trustees and the State Boards of Trustees constituted under section 5-A and section 5-B, respectively, of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 (19 of 1952), or the Life Insurance Corporation Act, 1956 (3 I of 1956), or [the Oil and Natural Gas Corporation Limited registered under the Companies Act, 1956 (I of 1956)], or the Deposit Insurance and Credit Insurance and Credit Guarantee Corporation established under section 3 of the Deposit Insurance and Credit Guarantee Corporation Act, 1961 (47 of 1961), or the Central Warehousing Corporation established under section 3 of the Warehousing Corporations Act, 1962 (58 of 1962), or the Unit Trust of India established under section 3 of the Unit Trust of India Act, 1963 (52 of I963), or the Food Corporation of India established under section 3, or a Board of Management established for two or more contiguous States under section 16 of the Food Corporations Act, 1964 (37 of 1964), or [the Airports Authority of India constituted under section 3 of the Airports Authority of India Act, 1994 (55 of 1994)], or a Regional Rural Bank established under section 3 of the Regional Rural Banks Act, 1976 (21 of 1976), or the Export Credit and Guarantee Corporation Limited or the Industrial Reconstruction Corporation of India Limited], or [the National Housing Bank established under section 3 of the National Housing Bank Act, 1987 (53 of 1987) or [the Banking Service Commission established under section 3 of the Banking Service Commission Act, 1975,] or [an air transport service, or a banking or an insurance company], a mine, an oil field], (a Cantonment Board] or a major port, the Central Government; and (ii) in relation to any other industrial dispute, the State Government;" An analysis of this provision shows that the Central Government will be the appropriate Government in relation to an industrial dispute concerning: (I) any industry carried on by or under the authority ofthe Central Government, or by a railway company; or (2) any such controlled industry as may be specified in this behalf by the Central Government; or (3) the enumerated industries (which form part ofthe definition quoted above and need not be reproduced here).

• What is evident is that the phrase "any industry carried on by or under the authority of the Central Government'' is a common factor in both the unamended as well as the amended definition. It is a well-settled proposition of law that the function of the Court is to interpret the Statute to ascertain the intent of the legislature-Parliament. Where the language of the Statute is clear and explicit the Court must give effect to it because in that case words of the Statute unequivocally speak the intention of the legislature. This rule of literal interpretation has to be adhered to and a provision in the Statute has to be understood in its ordinary natural STEEL AUTHORITY OF INDIA LTD v. NATIONAL UNIONWATERFRONT WORKERS [QUADRI, J. J ) 67 ,sense unless the Court finds that the provision sought to be interpreted is ·vague or obscurely worded in which event the other principles of interpretation ·may be called in aid.

A plain reading of the said phrase, under interpretation, shows that it is lucid and clear. There is no obscurity, no ambiguity and no abstruseness. Therefore· the words used therein must be construed in their natural ordinary meaning as commonly understood. We are afraid we cannot accept the contention that in construing that expression or for that matter any of the provisions of the CLRA Act, the principle of literal interpretation has to be discarded as it represents common law approach applicable only to private law field and has no relevance when tested on the anvil of Article 14, and instead the principle of public law interpretation should be adopted. To accept that contention, in our view, would amount to abandoning a straight' route and oft treaded road in an attempt to create a pathway in a wilderness which can only lead astray. We .

have not come across any principles of public law interpretation as opposed to private law interpretation for interpreting a statute either in any authoritative treatise on interpretation of statutes or in pronouncement of any Court nor is any authority ofthis Court or any other Court brought to our notice. We may, however, mention that there does exist a distinction between public law and private law. This has been succinctly brought out by the Rt. Hon. Sir Harry Woolf (as he then was, now Lord Woolf) in The Second Harry Street Lecture delivered in the University of Manchester on February 19, 1986. The learned Law Lord stated : "I regard public law as being the system which enforces the proper performance by public bodies of the duties which they owe to the public. I regard private law as being the system which protects the private rights of private individuals or the private rights of public bodies.

The critical distinction arises out of the fact that it is the public as a whole, or in the case of local government the public in the locality, who are the beneficiaries of what is protected by public law and it is the individuals or bodies entitled to the rights who are the beneficiaries of the protection provided by private law. " The divide between the public law and the private law is material in regard to the remedies which could be availed when enforcing the rights, public or private, but not in regard to interpretation of the Statutes. We are not beset with the procedural mandate as in the R. S. C. Order 53 of 1977 of ·England which was the subject matter of consideration by the House of Lords ,H in O'Reilly v. Mackman. In that case the appellant sought declaration by ordinary action that the order passed by the Prison's Board of visitors awarding penalty against him was void and of no effect.

The House of Lords, dismissing the appeal filed against the judgment of the Court of Appeal, held that where • a public law issue arises, the proceedings should be brought by judicial review under R. S. C. Order 53 and not by private law action which would be abuse of the process of court. ..... Now, going back to the definition of the said expression, it combines three alternatives, viz. , (a) any industry carried on by the Central Government; (b) any industry carried on under the authority of the Central Government; and (c) any industry carried on by a railway company. Alternatives (a) and (c) indicate cases ofany industry carried on directly by the Central Government or a railway company. They are too clear to admit of any polemic. In regard to alternative (b), surely, an industry being carried on under the authority of the Central Government cannot be equated with any industry carried on by the Central Government itself.

This leaves us to construe the words "under the authority ofthe Central Government". The key word in them is ·authority'. The relevant meaning of the word "authority" in the Concise Oxford Dictionary is delegated power. In Black's Law Dictionary the meanings of the word "authority" are: permission; right to exercise powers - often , synonymous with power. The power delegated by a principal to his agent. The la11ful delegation ofpower by one person to another. Power ofagent to affect legal relations ofprincipal by acts done in accordance with principal's manifestations ofconsent to agent. In Corpus Juris Secundum (at p. 1290) the following are the meanings of the term "authority": in its broad general sense, the word has been defined as meaning control over; power; jurisdiction; power to act, whether original or delegated.

The word is frequently used to express derivative power; and in this sense, the word may be used as meaning instructions, permission, power delegated by one person to another, the result ofthe manifestations by the former to the latter ofthe farmer's consent that the latter shall act for him, authority in this sense - in the laws ofat least one state, it has been similarly used as designating or meaning an agency for the purpose of carrying out a state duty or function; some one to whom by law a power has been given. In ·Words and Phrases' we find various shades of meaning of the word "authority" at pp. 603, 606, 612 and 613: Authority, as the word is used throughout the Restatement, is the power of one person to affect the legal relations of another by acts done in accordance with the 4. [1983] 2 Appeal Cases 237 STEEL AUTHORITYOF INDIALTD. v. NATIONAL UNIONWATERFRONT WORKERS [QUAORI. J.

] 369 other's manifestations ofconsent to him; an agency of one or more participating governmental units created by statute for specific purpose of having delegated to it certain functions governmental in character; the lawful delegation of power by one person to another; power of agent to affect legal relations of principal by acts done in accordance with principal's manifestations of consent to him. From the above discussion, it follows that the phrase "any industry carried on under the authority of the Central Government" implies an industry which is carried on by virtue of, pursuant to, conferment of, grant of, or delegation of power or permission by the Central Government to a Central Government Company or other Govt. company/undertaking. To put it differently, if there is lack of conferment of power or permission by the Central Government to a government company or undertaking, it would disable such a company/undertaking to carry on the industry in question.

In interpreting the said phrase, support is sought to be drawn by the learned counsel for the contract labour from the cases laying down the principles as to under what circumstances a Government company or undertaking will fall within the meaning of "State or other authorities" in Article 12 of the Constitution. We shall preface our discussion of those cases by indicating that for purposes of enforcement of fundamental rights guaranteed in Part Ill of the Constitution the question whether a Government Company or undertaking is "State" within the meaning of Article 12 is germane.

It is important to notice that in these cases the pertinent question is appropriateness of the Government - which is the appropriate Government within the meaning of CLRA Act; whether, the Central or the State Government, is the appropriate Government in regard to the industry carried on by the Central/State Government Company or any undertaking and not p whether such Central/State Government company or undertaking come within 5 the meaning of Article 12. The word ·State' is defined in Article 12 which is quoted in the footnote. In Sukhdev Singh and Ors. v. Bhagatram Sardar Singh Raghuvanshi and Anr. ,' this Court, in the context whether service Regulations framed by 5. "In ! his part, unless the context otherwise requires, "the State" includes the Government and Parliament ofIndia and the Government and the Legislature ofeach ofthe States and all local or other authorities within the territory of India or under the control of the Government oflndia. '' 6. 1975 (3) SCR 619.

statutory corporations have the force of law, by majority, held that the statutory corporations, like ONGC, JFFCO, LIC established under different statutes fell under "other authorities" and were, therefore, "State" within the meaning ofthat term in Article 12 ofthe Constitution. The Court took into consideration the following factors, (a) they were owned, managed and could also be dissolved by the Central Government; (b) they were completely under the control of the Central Government and (c) they were performing public or statutory duties for the benefit of the public and not for private profit; and concluded that they were in effect acting as the agencies of the Central Government and the service Regulations made by them had the force of law, which would be enforced by the Court by declaring that the dismissal of an employee of the corporation in violation of the Regulations, was void. In Ramanna Dayaram Shetty v. The International Airport ofIndia and Ors.

,' a three-Judge Bench of this Court laid down that Corporations created by the Government for setting up and management of public enterprises and carrying out public functions, act as instrumentalities of the Government; they would be subject to the same limitations in the field of constitutional and administrative laws as Government itself, though in the eye of law they would be distinct and independent legal entities. There, this Court was enforcing the mandate ofArticle 14 ofthe Constitution against the respondent - a Central Govt. Corporation. Managing Director, U. P. Warehousing Corporation and Anr. v. Vinay Narayan Va)payee' dealt with a case of dismissal of the respondent-employee of the appellant-Corporation in violation of the principles of natural justice.

There also the Court held the Corporation to be an instrumentality of the State and extended protection of Articles 14 and 16 of the Constitution to the employee taking the view that when the Government is bound to observe the equality clause in the matter of employment the corporations set up and owned by the Government are equally bound by the same discipline. In Ajay Hasia etc. v. Khalid Mujib Sehravardi and Ors. etc. ', the question decided by a Constitution Bench ofthis Court was: whether Jammu & Kashmir Regional Engineering College, Srinagar, registered as a society under the Jammu & Kashmir Registration of Societies Act, 1898, was 'State' within the meaning of Article 12 of the Constitution so as to be amenable to writ 7. 1979 (3) SCR 1014 8. 1980 (2) SCR 773 9. 1981(2)SCR79 STEEL AUTHORITY OF INDIALTD. v. NATIONAL UNIONWATERFRONTWORKERS (QUADRl, I. ] J7J jurisdiction of the High Court.

Having examined the Memorandum of Association and the Rules of the Society, the Court decided that the control of the State and the Central Government was deep and pervasive and the society was a mere projection of the State and the Central Government and it was, therefore, an instrumentality or agency of the State and Central Government and as such an authority-state within the meaning of Article 12.

The principle laid down in the aforementioned cases that if the government acting through its officers was subject to certain constitutional limitations, a fortiorari the government acting through the instrumentality or agency of a corporation should equally be subject to the same limitations, was approved by the Constitution Bench and it was pointed out that otherwise it would lead to considerable erosion of the efficiency of the Fundamental Rights, for in that event the government would be enabled to override the Fundamental Rights by adopting the stratagem of carrying out its function through the instrumentality or agency of a corporation while retaining control over it. That principle has been consistently followed and reiterated in all subsequent cases- See Delhi Transport Corpn. v. D. T. C. Mazdoor Congress 1 and Ors. ,'° Som Prakash Rekhi v. Union of India and Anr. ,1 Manmohan 12 Singh Jaitla etc. v. Commr. , Union Territory ofChandigarh and Ors. etc. , 13 P. K.

Ramachandra Iyer and Ors. etc. v. Union ofIndia and Ors. etc. , A. L. Kalra v. Project and Equipment Corpn. OfIndia Ltd. ," Central Inland Water 15 Transport Corpn. Ltd. and Anr. etc. v. Brojo Nath Ganguly and Anr. etc. , 16 C. V. Raman v. Management of Bank" of India and Anr. etc. , Lucknow Development Authority v. MK. Gupta,r Mis Star Enterprises and Ors. v. City and Industrial Development Corpn. ofMaharashtra Ltd. and Ors. ,'" LIC 19 ofIndia and Anr. v. Consumer Education and Research Centre and Ors. 10 and G. B. Mahajan and Ors. v. Jalgaon Municipal Council and Ors. We do 10. 1991 Suppl. (I) sec 600 11. 1931 (I) sec 449 12. 1984 suppl. sec 540 13. 1984 (2) sec 141 14. 1984 (3) sec 316 15. 1986 (3) sec 156 16. 1988 (3) sec 105 17. 1994 (I) sec 243 18. 1990 (3) sec 280 19. 1995 (5) sec 482 ' 20. 1991 (3)SCC91 not propose to burden this judgment by adding to the list and referring to each case separately.

We wish to clear the air that the principle, while discharging public functions and duties the Govt. Companies/Corporations/Societies which are instrumentalities or agencies of the Government must be subjected to the same limitations in the field of public Jaw-constitutional or administrative law-as the Government itself, does not lead to the inference that they become agents of the Centre/State Government for all purposes so as to bind such Government for all their acts, liabilities and obligations under various Central and/or State Acts or under private law. From the above discussion, it follows that the fact of being instrumentality of a Central/State Govt. or being ·State' within the meaning of Article 12 of the Constitution cannot be determinative of the question as to whether an industry carried on by a Company/Corporation or an instrumentality of the Govt.

is by or under the authority of the Central Government for the purpose of or within the meaning of the definition of ·appropriate Government' in the CLRA Act. Take the case of a State Government corporation/company/undertaking set up and owned by the State Government which is an instrumentality or agency of the State Government and is engaged in carrying on an industry, can it be assumed that the industry is carried on under the authority of the Central Government, and in relation to any industrial dispute concerning the industry can it be said that the appropriate Government is the Central Government? We think the answer must be in the negative. In the above example if, as a fact, any industry is carried on by the State Government undertaking under the authority of the Central Government, then in relation to any industrial dispute concerning that industry, the appropriate Government will be the Central Government. This ....

is so not because it is agency or instrumentality of the Central Government but because the industry is carried on by the State Govt. Company/Corporation/ Undertaking under the authority of the Central Government. In our view, the same reasoning applies to a Central Government undertaking as well. Further, the definition of·establishment' in CLRA Act takes in its fold purely private undertakings which cannot be brought within the meaning of Article 12 of the Constitution. In such a case how is ·appropriate Government' determined for the purposes of CLRA Act or Industrial Disputes Act? In our view, the test which is determinative is: whether the industry carried on by the establishment in question is under the authority ofthe Central Govt? Obviously, there cannot be one test for one part of definition of ·establishment' and STEEL AUTHORITYOF INDIALTD. '- NATIONAL UNION WATERFRONTWORKERS (QUADRI, lI J73 another test for another part.

Thus, it is clear that the criterion is whether an undertaking/instrumentality of Government is carrying on an industry under the authority of the Central Government and not whether the undertaking is instrumentality or agency of the Government for purposes of Article 12 of the Constitution, be it of Central Government or State Government. There cannot be any dispute that all the Central Government companies with which we are dealing here are not and cannot be equated to Central Government though they may be 'State' within the meaning of Article 12 of the Constitution. We have held above that being the instrumentality or agency ofthe Central Government would not by itself amount to having the authority of the Central Government to carry on that particular industry. Therefore, it will be incorrect to say that in relation to any establishment of a Central Government Company/undertaking, the appropriate Government will be the Central Government.

To hold that the Central Government is "the appropriate Government" in relation to an establishment, the court must be satisfied that the particular industry in question is carried on by or under the authority of the Central Government. If this aspect is kept in mind it would be clear that the Central Government will be the "appropriate Government'· under the CLRA Act and the LO. Act provided the industry in question is carried on by a Central Government company/an undertaking under the authority of the Central Government. Such an authority may be conferred, either by a Statute or by virtue of relationship of principal and agent or delegation of power. Where the authority, to carry on any industry for or on behalf of the Central Government, is conferred on the Government company/any undertaking by the. Statute under which it is created, no further question arises.

But, if it is not so, the question that arises is whether there is any conferment of authority on the Government company/ any undertaking by the Central Government to carry on the industry in question. This is a questi. ~m of fact and has to be • ascertained on the facts and in the circumstances of each case. We shall refer to the cases of this Court on this point. 21 In Heavy Engineering Mazdoor Union v. State ofBihar and Ors. the said expression (appropriate Government) came up for consideration. The Heavy Engineering Corporation is a Central Government company. The President of India appoints Directors of the company and the Central Government gives directions as regards the functioning of the company. When disputes arose between the workmen and the management of the 21 ! 969(l)SCC 765 company, the Government of Bihar referred the disputes to the Industrial Tribunal for adjudication.

The union of the workmen raised an objection that the appropriate Government in that case was the Central Government, therefore, reference of the disputes to the Industrial Tribunal for adjudication by the State Government was incompetent. A two-Judge Bench of this Court elaborately dealt with the question of appropriate Government and concluded that the mere fact that the entire share capital was contributed by the Central Government and the fact that all its shares were held by the President of India and certain officers ofthe Central Government, would not make any difference. It was held that in the absence of a statutory provision, a commercial corporation acting on its own behalf even though it was controlled, wholly or partially, by a Government Department would be ordinarily presumed not to be a servant or agent of the State.

It was, however, clarified that an inference that the corporation was the agent of the Government might be drawn where it was performing in substance Governmental and not commercial functions. It mu. ;t be mentioned here that in the light of the judgments of this Court, referred to above, it is difficult to agree with the distinction between governmental activity and commercial function of government companies set up and owned by government, insofar as their function in the realm of public law are concerned. However, t