Supreme Court: In an appeal, arising from a challenge to the order of reference dated 28-01-2020 made by the appropriate Government under Sections 10(1) and 12(5) of the Industrial Disputes Act, 1947 (ID Act) thereby referring an industrial dispute for adjudication to the Industrial Court, where the principal question was whether the reference was vitiated on the ground that no prior written demand had been raised with the Management before approaching the Conciliation Officer, and whether, in such circumstances, a valid industrial dispute or apprehended industrial dispute existed within the meaning of the Act, a Division Bench of Pankaj Mithal and S.V.N. Bhatti,* JJ., affirmed the High Court’s judgment, holding that the reference made by the appropriate Government was legal and valid, and that a prior demand is not mandatory for an industrial dispute reference under the Act. The Court further held that —
-
A prior written demand on the employer is not a sine qua non for the existence of an industrial dispute.
-
The appropriate Government may refer even an apprehended dispute under Section 10(1) of the ID Act.
-
Disputes as to whether a contract labour arrangement is sham must be adjudicated by the Industrial Court.
Factual Matrix
In the instant matter, the appellant is engaged in the manufacture of transmission engineering products such as worm gearboxes, planetary gearboxes, fluid couplings, and allied machinery. According to the Management, its regular and perennial operations were carried out by 118 trained permanent employees, while ancillary and incidental work was outsourced to registered contractors under the Contract Labour (Regulation and Abolition) Act, 1970 (CLRA). The contractors engaged were M/s Om Sai Manpower Services Pvt. Ltd. and M/s Aurangabad Multi Services.
The workmen, represented by Aurangabad Mazdoor Union, alleged that the contract system was “sham, bogus and camouflaged” and that in substance they were employees of the Management. They claimed equal wages, permanency, and continuity of service.
On 11-06-2019, the Union directly approached the Conciliation Officer under Section 12 of the Industrial Disputes Act, 1947 (ID Act), submitting a charter of demands, including absorption on the muster roll of the Management, classification as permanent workmen, equal wages, declaration that the contractual arrangement was sham, and protection against termination.
On failure of conciliation as per failure report dated 22-01-2020, the Deputy Labour Commissioner referred the dispute to the Industrial Court by order dated 28-01-2020 under Sections 10(1) and 12(5) of the ID Act.
The Management challenged the reference by filing writ petition before the Bombay High Court, contending that no valid industrial dispute existed as no prior demand had been raised before it. The High Court dismissed the writ petition, upholding the reference. The present civil appeal was filed against the High Court’s judgment.
Moot Points
-
Whether an industrial dispute can be said to exist when the Union directly approaches the Conciliation Officer without first serving a charter of demands on the employer?
-
Whether the reference made under Section 10 of the ID Act was invalid for want of a prior demand and rejection?
-
Whether disputes relating to the genuineness of a labour contract can be adjudicated through industrial adjudication.
Court’s Analysis
The Court noted that the core objection of the Management was that no valid “industrial dispute” existed because the Union had approached the Conciliation Officer directly without first raising a demand with the employer.
The Court examined the statutory scheme of Sections 10 and 12 of the ID Act and held that “Section 12, in terms, does not stipulate that a condition precedent to invoking its jurisdiction is to first approach the Management and receive a reply, and then knock on the doors of the Conciliation Officer.” The Court reiterated that under Section 10(1), the appropriate Government may refer a dispute “if it is of opinion that any industrial dispute exists or is apprehended.”
The Court rejected the argument that a prior demand is mandatory and observed that such an interpretation would render the expression “is apprehended” otiose.
On the nature of contract labour disputes, reliance was placed on SAIL v. National Union Waterfront Workers, and the Court reiterated that “if the contract is found to be sham, nominal or a camouflage, the workmen are in fact employees of the principal employer, and the dispute must be adjudicated by the Industrial Court.”
The Court stated that the relationship between the parties in the present case was tripartite, namely, between the Management and the contractors, between the contractors and the workmen, and between the workmen and the Management through the contractors. While the Management denied any employer—employee relationship, the Union asserted that the contract was “sham and nominal” and that the Management was the real principal employer. The Court held that
“From Management’s perspective, the members of the third respondent Union are not its workers. The very denial of the status could also be considered as a dispute in the established facts and circumstances of the case.”
On the concept of apprehended disputes, the Court relied upon Shambu Nath Goyal v. Bank of Baroda and observed “a formal written demand by a workman to the employer is not a sine qua non for the existence of an industrial dispute under Section 2(k) of the Act.”
The Court further remarked on the preventive object of the statute and the role of the State in maintaining industrial peace. The Court emphasised that “the power to refer an ‘apprehended’ dispute is the statutory application of the old adage ‘a stitch in time saves nine’. It enables the State to intervene before the industrial peace is shattered.”
The Court cautioned against permitting preliminary objections to frustrate adjudication at the threshold and held that such an approach would convert a mechanism meant for timely resolution into an engine of delay. The Court also reiterated on the limited nature of the Government’s role while making a reference:
“The administrative decision merely looks at an industrial dispute or an apprehended industrial dispute. The merit or otherwise of the dispute is for the adjudicatory body to decide.”
The Court held that the grievances raised by the Union could not be “wished away without adjudication” and that the principle ubi jus ibi remedium must guide the interpretation of the statute.
The Court found no illegality in the failure report or the reference order and upheld the High Court’s view that interference at the threshold would defeat the object of industrial adjudication.
Court’s Decision
The Court held that where workmen allege that a contract labour arrangement is sham and seek declaration of employer—employee relationship, the dispute constitutes an industrial dispute or at least an apprehended industrial dispute within Section 10 of the ID Act, and a reference cannot be quashed merely because no prior demand was served on the employer.
The Court dismissed the civil appeal and upheld the validity of the reference. The Court directed the Industrial Court to frame the following issues —
-
Whether the contracts through which employment was provided were sham and nominal.
-
Whether, having regard to the nature of work discharged, the Management was the principal employer.
The Court further directed the Industrial Court to dispose of the reference expeditiously, preferably within four months.
[Premium Transmission (P) Ltd. v. State of Maharashtra, 2026 SCC OnLine SC 113, Decided on 27-01-2026]
*Judgment by Justice S.V.N. Bhatti