AIR INDIA STATUTORY CORPORATION A v.

UNITED LABOUR UNION AND ORS.

DECEMBER 6, 1996

[K. RAMASWAMY, B.L. HANSARIA AND S.B. MAJMUDAR, Jl] B

Contract Labour (Regulation and Abolition) Act, 1970:

Sections 2(1)(a) (As it stood before and after Amendment Act 14 of 1986), 2( 1)(b }, 8, 9, 10, 12, 14, and 16 to 19, 20, 21, 23 to 25.

Contract Labour (Regulation and Abolition) Central Rules, 1971 Rules 18(3), 21 to 25, 75, 77 and 78.

''Appropriate Government''-Meaning of-Establishment pertaining to an industry carried on by Central Government-i'linciples for determinatiori D of appropriate Government laid down-Appellant initially a statutory autho1ity later reconstituted as a Company-fl eld Central Government was appropriate Government before and after 1986 Amendment.

Contract Labour-Abolition of-Effect-Held on abolition Contractor stands removed from Regulation under the Act, and direct relationship of E employer and employee is created between employer and workmen-Employee is obliged to absorb the workmen-On employer's failure to do so, High Court can give directions under Article 226-0bject of the Act explained.;

Industrial Disputes Act, 1947: Section 10.

Reference-Contract Labour-Abo/itiOn of-Employer is obliged to absorb the workers-In such a case reference of dispute for absorption is not necessary.

Constitution of India, 1950 :

Articles 14 and 21-Right to work-Not a fundamental light-But after en1ploynient a person 1nust be dealt with assuring hini equality.

Article 38-Preamble--Social Justice-Relevance of for workmen.

H 579

A Article 226-High Courf--Power to issue directions for absorption of-Contract Labour-Upheld.

Judicial Review-Basic structure of Constitution-High Court has constitutional duty to enforce law by appropriate directions.

B Public Law-Private /aw-Distinction between Constitution-interpretation of-Principles for.

Words and Phrases :

C Regulation-Meaning of-Contract Labour (Regulation and Abolition) Act, 1970.

The appellant Corporation, initially a statutory authority, was subsequently reconstituted as a Company under the Companies Act, 1956. It engaged, as contract labour, the respondent union's members, for sweep- D ing, clearing, dusting and watching of the buildings owned and occupied by it. Subsequent to the coming into force of the Contract Labour (Regulation and Abolition) Act, 1970 the appellant obtained a certificate of Registration from Regional Labour Commissioner (Central) under the Act. Thereafter by a notification dated December 9, 1976 the Central Government prohibited employment of contact labour for sweeping, clean- E ing, dusting and watching of buildings owned or occupied by the establishments in respect of which the appropriate Government under the Act was the Central . Government. By a letter dated January 20, 1972, the Regional Labour Commissioner (Central), Bombay informed the appel lant that the State Government was the appropriate Government under F the Act. Therefore, by proceedings dated May 22, 1973 the Regional Labour Commissioner (Central) bad revoked the registration. By Amendment Act 46 of 1982, the Industrial Disputes Act, 1947 was made applicable to the appellant and was brought on statute book specifying the appellant as one of the industries in relation to which the Central Government is the appropriate Government and the appellant has been carrying on its busi- G ness "by or under its authority" with effect from August 21, 1982. The Act was amended bringing within its ambit the Central Government as appropriate Government by Amendment Act 14 of 1986 with effect from January 28, 1986. Since the appellant did not abolish the contract system and failed to e, nforce the notification of the Government of India dated H December 9, 1976, the respondents filed writ petition for directions to the

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AIR INDIASTATUTORY CORPN. v. UNION LABOUR UNION 581

appellant to enforce forthwith the notification abolishing the contract A labour system in the aforesaid services and to absorb all the employees doing cleaning, sweeping, dusting, washing and watching of the buildings owned or occupied by the appellant-establishment, with effect from the respective dates of their joining as contract Labour in the appellant's establishment with all consequential rights/benefits, monetary or otherwise. The writ petition was allowed by a single Judge on November 16, 1989 directing that all contract workers be regularised as employees of the appellant from the date of filing of the writ petition. Preceding thereto, on November 15, 1989, the Government of India referred to the Central Advisory Board known as Mobile Committee under Section 10(1), which recommended to the Central Government not to abolish the contract C labour system in the aforesaid setvices .. The Division Bench dismissed the appeal. Similar was the fate of othejRp~als.

In appeals to this Court, on the questions :

1. What is the meaning of the word "appropriate Government under D Section 2(1) (a) of the Act?

2. Whether the view taken in Heavy Engineering case is correct in law?

3. Whether on abolition the contract labourare entitled to be absorbed; if so, from what date?

4. Whether the High Court under Article 226 has power to direct their absorption; if so, from what date?

5. Whether it is necessary to make a reference under Section 10 of F the ID Act for adjudication of dispute qna absorption of the contract labour?

6. Whether the view taken by this Court in Dena Nath and Gujarat State Electricity Board's case is correct in law?

Disposing the appeals, this Court

HELD : Per Ramaswamy, !.

1. The appropriate Government is the Central Government from the inception of the Act. The notification published under Section 10 on H

A December 9, 1976, therefore, was in exercise of its power as appropriate Government. So it is valid in law. [603-G]

2. Before the Central or State Advisory Board advises the appropriate Government under Section 10(1) on the issue whether or not to B abolish the contract labour system, it has before it all the relevant factual material and the appropriate Government after the receipt and consideration of the recommendations and the material and then taken decision. It is not right to contend that the relevant factors for abolition of the contract labonr system in the establishment or the appellant was not before the Central Advisory Board before its recommendation to abolish the contract C Jabonr system in the establishment of the appellant. Tue minutes of the Board and the material furnished indicate that the work in all the establishments inclnding those of the appellants, is of perennial nature satisfying all the tests engrafted in Section 10(2) of the Act. Accordingly, on finding the work to be of perennial nature, it had recommended and the D Central Government had considered and accepted the recommendation to abolish the contract Jabour system in the aforesaid services. Having abolished it, the Central Government was denuded of its power under Section 10(1) to again appoint insofar as the above services of the Mobile Committee to go once over into the self-same question and the recommendations of the latter not to abolish the contract Jabour system in the above E services and the acceptance thereof by the Central Government are without any legal base, and, therefore, non est. [619-G-H; 620-AB]

3. Constitutional issues require interpretation broadly not by play of words or without the acceptance of the line of their growth. Preamble F of the Constitution, as its integral part, is designed to realise socio economic justice to all people including workmen, harmoniously blending the details epumerated in the Fundamental Rights and the Directive Principles. The Contract Labour (Regulation and Abolition) Act, 1970 is a social welfare measure to further the general interest of the community of workmen as opposed to the particular interest of the individual G entrepreneur. It seeks to achieve a public purpose, i.e. regnlated conditions of contract Jabour and to abolish it when it is found to be of perennial nature etc. Tue individual interest can, therefore, no longer stem the forward Rowing tide and must, of necessity, give way to the broader pnblic purpose of establishing social and economic democracy in which every H workmen realises socio-economic justice assured in the Preamble, Articles -

AIR INDIA STATUTORY CORPN. v. UNION LABOUR UNION 583

14, 15 and 21 and the Directive Principles of the Constitution. (608-A-D] A

4. Courts are sentinal in the qui vive of the rights of the people, in particular, the poor. The judicial function of a Court, therefore, in interpreting the Constitution and the provisions of the Act, requires to build up continuity of socio-economic empowerment to the poor to sustain B equality of opportunity and status and the law should constantly meet the needs and aspiration of the society in establishing the egalitarian social order. Therefore, the concept engrafted in the statute require interpretation from that perspective, without doing violence to the language. Such an interpretation would elongate the spirit and purpose of the Constitution and make the aforesaid rights to the workmen a reality lest estab C lishment of an egalitarian social order would be frustrated and Constitutional goal defeated. (609-D-F]

His Holiness Kesavananda Bharati Sripadagalavaru v. State of Kera/a, (1973] Supp. SCR 1; S.R. Bommai v. Union of India, [1994] 3 SCC 1; D Minerva Mills Ltd. & Ors. v. Union & Ors., [198Jl 1 SCR 206 = AIR (1980)

SC 1789; Francis Coralie Mullin v. The Administrator, Union Tenitory of Delhi & Ors., AIR (1981) SC 746; Olga Tellis v. Bombay Municipal Corporation, AIR (1986) SC 180; Delhi Transport Corporation v. D. T.C. Mazdoor Congress, AIR (1991) SC 101; State of Maharashtra v. Chandrabhan, AIR

(1983) SC 803; Consumer Education and Research Centre and Ors. v. Union E of India, [1995] 3 SCC 42 = [1995] 1 SCALE 354; D.S. Nakara & Ors. v.

Union of India, [1983] 2 SCR 165; State of Kamataka v. Shri Ranganath Reddy & Anr., (1978] 1 SCR 641; Sanjeev Coke Manufacturing Co. v. Bharat Cooking Coal Ltd. & Anr., (1983] 1 SCR 1000; LIC of India & Anr. v.

Consumer Education & Research Centre & Ors., [1995] 5 SCC 482; Murlid- F har Dayandeo Kesekar v. Vishwanath Pandu Barde & Anr., (1995] Supp. 2 SCC 549; R. Chandevarappa & Ors. v. State of Kamataka and Ors., [1995] 6 SCC 309; Peerless General Finance and Investment Co. Ltd. & Anr. v.

Reserve Bank of India, (1992] 2 SCC 343; D.K Yadav v. !.M.A. Industries Ltd., [1993] 3 SCC 259; Da/mia Cement (Bharat) Ltd. & Anr. v. Union of India & Ors. Etc., JT (1996) 4 SC 555; Bandhu Mukti Morcha v. Union of G India, [1984] 3 SCC 161; C.E.S.C. Ltd. & Ors. v. S.C. Bose & Ors., [1992] 1 SCC 441; P.G. Gupta v. State of Gujarat & Ors., (1995] Supp. 2 SCC 182; Mis. Shantisar Builders v. Narayan Khim/a/ Totame, [1990] 1 SCC 520; Chameli Singh & Ors. v. State of U.P. & Anr. [1996] 2 SCC 549 and D.K V.

Prasad Rao & Ors. v. The Government of Andhra Pradesh represented by its H

A Secretary, Home Department Secretariat Buildings, Andhra Pradesh Hyderabad & Anr., (1983) 2 AWR 344 = AIR (1984) AP, referred to.

Munn v. The People of Illinois, 94 US 115; Horatio, J. Olcott v. County Board of Supervisors of Fond Du Lac County, 21 L. Ed. 382; John 0.

Graham, Commissioner, Depa1tment of Public Welfare, State of Arizona v.

Cannen Richardson Etc., 29 L. Ed. 2nd 534; Grace Marsh v. State of Alabama, 90 L. Ed. 265; Republic Ayiation Corporation v. National Labour Relations Board, 324 US 793 = 89 L. Ed. 1372; Georgia & Banking Co. v.

James M; Smith, 128 US 377 = 32 L. Ed.174 and Gennan Aliance Insurance Co. v. IKL Lws, 58 L. Ed. 1011 = 233 US 387, referred to.

Justice K.K. Mathew,. "Right to Equality and Property under the India Constitution pp. 47-48; St: Thomas Acquinas "Selected Political Writing" ' (1948 Ed.) 169; Dean Rosco Pound ''An Introduction to Philosophy of Law" (1954 Edn.) page 125; M. Cohen, "Property and Sovereignty" (13 Cornell Law Quarterly page 8; Edward Kent "Property, Power and Authority"; Herald D Laski, "Congress Socialist" dated April 11, 1936; Mahatma Gandhiji,

"Socialism of My Concept; Pandit Jawahar Lal Nehru ''Independence and After That" (Collection of Speeches 1946-49) Publication Division, Government of India 1949 Edn. page 28; Agnes Heller, "Beyond Justice" page 180, referred to.

5. It is axiomatic, whether or not industry is controlled by Government or public Corporations by statutory form or administrative clutch or private agents, juristic persons, Corporation whole or Corporation sole, their constitution, control and working would also be subject to the same constitutional limitations in the trinity, viz., Preamble, the Fundamental Rights and the Directive Pri.nciples. They throw open an element of public interest in its workings. They share the burden and shoulder constitutional obligations to provide facilities and opportunities enjoined in the Directive Principles, the Permeable and the fundamental rights enshrined in the Constitution. The word 'control', therefore, requires to be interpreted in G the changing commercial scenario broadly in keeping with the aforesaid constitutional goals and perspectives. From this the following principles would emerge :

(a) The Constitution of the Corporation or instrumentality or agency or Corporation aggregate or Corporation sole is not of sole material H relevance to decide whether it is by or under the control of the appropriate

AIR INDIASTATUTORY CORPN. v. UNION LABOUR UNION 585

Government under the Act.

(b) If it is a statutory Corporation, it is au instrumentality or agency of the State. Ifit is a company owned wholly or partially by a share capital, floated from public exchequer, it gives indicia that it is controlled by or under the authority of the appropriate Government.

(c) In commercial activities carried on by a Corporation established by or under the control of the appropriate Government having protection under Articles 14 and 19(2), it is an instrumentality or agency of the State.

(d) The State is a service Corporation. It acts through its instrumentalities, agencies or persons - natural or juridical.

(e) The governing power, wherever located, most be subject to the fundamental constitutional limitations and abide by the principles laid down in the Directive Principles.

(0 The framework of service regulations made in the appropriate rules or regulations should be consistent with and subject to the same public law principles and limitations.

(g) Through the instrumentality, agency or persons conduct com- E mercial activities according to business principles and are separately accountable nuder their appropriate bye-laws or Memorandum of Association, they become the arm of the Government.

(h) The existence of deep and pervasive Sl&te control depends upon the facts and circumstances in a given situation 'and in the altered situa- F tion it is not the sole criterion to decide whether the agency or instrumentality or persons is by or under the control of the appropriate Government.

(i) Functions of an instrumentality, agency or person are of public G importance following public interest element.

(j) The instrumentality, agency or person most have an element of authority or ability to affect the relations with its employee or public by virtue of power vested in it by law, memorandum of association or by~-laws or articles of association.

(k) The instrumentality, agency or person renders an element of

public service and is accountable to health and strength of the workers, men and women, adequate means of livelihood, the security for payment of living wages, reasonable conditions of work, decent standard of life and opportunity to enjoy full leisure and social and cultural activities to the workmen.

(I) Every action of the public authority, agency or instrumentality or the person acting on public interest or any act that gives rise to public element should be guided by public interest in exercise of public power or action hedged with public element and is open to challenge. It must meet C the test of reasonableness, fairness and justness.

(m) If the exercise of the power is arbitrary, unjust and unfair, the public authority, instrumentality, agency or the person acting in public interest, though in the field of private law, is not free to prescribe any unconstitutional conditions or limitations in their actions.

(617-A-H; 618-A-H]

Hindustan Aeronautics Ltd. v. The Workmen & Ors., (1975) 4 SCC 679; Rashtriya Mill Mazdoor Sangh v. Model Mills, Nagpur & Anr., (1984) Supp.

SCC 443; Food Corporation of India Workers Union v. Food Corporation of E India & Ors., [1985) 2 SCC 294; Sukhdev Singh & Ors. v. Bhagatram Sardar Singh & Anr., (1975) 3 SCR 619; R.D. Shetty v. Airport Authority & Ors.,

(1979) 3SCR1014; Managing Director, UP. Warehousing Corporation &Anr.

v. f.N. Vajpayee, (1980) 2 SCR 773; Ajay Hasia Etc. v. Khalid Mujib Sehravardi & Ors. Etc., (1981) 2 SCR 79; Rajasthan State Electricity Board, Jaipur

v. Mohan Lal & Ors., (1967) 3 SCR 377; Praga Tools Corporation v. C.V. F !manual, (1969) 3 SCR 773; Delhi Transport Corporation v. D. T.C. Mazdoor Corporation, AIR (1991) SC 101; Som Prakash Rekhi v. Union of India & Ors., (1981) 2 SCR 111; Manmohan Singh Jaitla v. Commissioner, Union Tenitory of Chandigarh & Ors., (1984) Supp. SCC 540; P.K. Ramachandra Iyer & Ors. v. Union of India & Ors., [1984) 2 SCC 141; A.L. Katra v. Project G and Equipment Corpn. of India Ltd., (1984) 3 SCC 316; Central Inland Water Transport Corporation Ltd. & Anr. v. Brojonath Ganguly & Anr., (1986) 3 SCC 156; LucknowDevelopmentAuthorityv.M.K Gupta, (1994) 1 SCC243; Star Enterprises & Ors. v. C.I.D. C. of Maharashtra Ltd., (1990) 3 SCC 280; LIC of India &Anr. v. Consumer Education & Research Centre & Ors., (1995) 5 SCC 482; G.B. Mahajan & Ors. v.Jalgaon Municipal Council & Ors., (1991) H 3 SCC 91; Shrisht Dhawan (Smt.) v. M/s. Shaw Brothers, (1992) 1 SCC 534;

AIR INDIA STATUTORY CORPN. v. UNION IABOUR UNION 587

Khwaja v. Secretary of State for the Home Department & Ors., (1983) 1 All. A E.R. 765 and M/s. Gammon India Ltd. & Ors. v. Union of India & Ors., [1974] 1 sec 596, referred to.

6. The two Judge Bench in Heavy Engineering casr narrowly interpreted the words 'Appropriate Government' on the Common Law Principles which no longer bear any relevance when it is tested on Article 14.

[619-C]

Heavy Engineering Mazdoor Union v. The State of Bihar & Ors., [1969] 3 SCR 995, overruled.

7. In a socialist democracy governed by the rule of law, private property, right of the citizen for development and his right to employment and his entitlement for employment to the labour, would all harmoneously

be blended to serve larger social interest and public purpose. All essential facilities and opportnnities to the poor people are fundamental means to development, to live with minimum comforts, food, shelter, clothing and D health. Due to economic constraint, though right to work was not declared as a fundamental right, right to work of workman, lower class, middle class and poor people is the means to development and source to earn livelihood. Though, right to employment cannot, as a right be claimed but after the appointment to a post or an office, be it under the State, its E agency, instrumentality, juristic person or plivate entrepreneur it is re .. quired to be dealt with as per public element and to act in public interest assuring equality, which is a genus of Article 14 and all other concomitant rights emanating therefrom are species to make their right to life and dignity of person real and meaningful. [639-C; 637-F-H]

8. So long as the contract labour system continues, the principal employer is enjoined to ensure payment of wages to the contract labour and

to provide all other amenities envisaged under the Act and the Rules including provisions for food, potable water, health and safety and failure thereofvisits with penal consequences. The Act contains various provisions G in this regard. All of them are fundamental human rights to the workmen and are facets of rights to life guaranteed under Article 21. When the principal employer is enjoined to ensure those rights and payment of wages while the contract labour system is under regulation, the question arises whether after abolition of the contract labour system the workmen should be left in a lurch denuding them of the mens of livelihood and the enjoy- H

A ment of the basis fundamental rights provided while the contract Iabonr system is regulated under the Act. The scheme of the Act gives indication that on the abolition of the contract labour system by publication of the notification in the Official Gazette, the necessary concomitant is that the whole time workmen are required for carrying on the process, operation or

other work being done in the industry, trade, business, manufacture, or occupation in that establishment. When the condition of the work which is of perennial nature etc., as envisaged in sub-section (2) of Section 10, thus are satisfied, the continuance of contract labour stands prohibited and abolished. The concomitant result would be that source of regular employment becomes open. [646-B-E; G-H; 647-A-B]

9. It is true that there is no express provision in the Act declaring the contract labour working in the establishment of the principal employer in the particular service to be the direct employees of the principal employer. The phrase "matters connected therewith" in the Preamble wonld fnrnish the consequence of abolition of contract labour. In this behalf, the D Gujarat Electricity Board case, attempted, by interpretation, to fill in the gap but it also fall short or full play and got beset with insurmonntable difficulties in its working which were not brought to the attention of the Bench. The object of the Act is to regulate the contract labour so long as the contract labour is not perennial. The Iabonr is required to be paid the prescribed E wages and are provided with other welfare benefits envisaged under the Act direct sµpervision of the principal employer. The violation visits with penal consequences. Similarly, when the appropriate Government finds that the employment is of perennial nature etc. contract system stands abolished, thereby, it intended that if the workmen were performing the dnties of the post which were fonnd to be of perennial nature on par with regular service, F they also require to be regularised. The Act did not intend to dennde them of their source of livelihood and means of development, throwing them out from employment. An Act is a socio-economic welfare legislation. Right to socio-economic justice and empowerment are constitutional rights. Right to means of livelihood is also constitutional right. Right to facilities and G opportunities are only part of and means to right to development. Without employment or appointment, the workmen will be denuded of their means oflivelihood and resultant right to life, leaving them inthe lurch since prior to abolition, they had the work and thereby earned livelihood. [647-B-G]

Gujarat Electricity Board v. Hind Mazdoor Sabha & Ors., (1995) 5 SCC H 27, partly overruled.

AIR INDIA STATUTORY CORPN. v. UNION LABOUR UNION 589

10. The Division Bench in Dena Nath's case has taken too narrow a A view on technical consideration without keeping at the back of the mind the constitutional animations and the spirit of the provisions and the object which the Act seeks to achieve. The operation of the Act is stru<· tured on an inbuilt procedure leaving no escape route. Abolition of contract labour system ensures right to the workmen for regularisation of B them as employees in the establishment in which they were hitherto work .ing as contract labour through the contractor. The contractor stands removed from the regulation under the Act and direct relationship of "employer and employee" is created between the principal employer and workmen. [647-GH; 648-AB]

Dena Nath and Ors. v. National Fertilizers and Ors., (1992] 1 SCC 695, overruled.

11. The object of the Act is to prevent exploitation of labonr. The object, thereby, is to ensure continuity of work to the workmen in strict D compliance of law. The conditions of the labour are not left at the whim and fancy of the principal employer. He is bound under the Act to regulate and ensure payment of the full wages, and also to provide all the amenities enjoined under the Act and the rules made thereunder. On abolition of contract labour, the intermediary i.e. contractor, is removed from the field and direct linkage between labour and principal employer is established. E Thereby, the principal employer's obligation to absorb them arises. The right of the employee for absorption gets ripened and fructified. If the interpretation in Dena Nath's case is given acceptance, it would be an open field for the principal employer to freely flout the provisions of the Act and engage workmen in defiance of the Act and adopt the principle of hire and F lire making it possible to exploit the appalling conditions in which the workmen are placed. The contractor is an intermediary between the workmen and the principal employer. The moment the contract labour system stands prohibited under Section 10(1), the embargo to continue as a contract labour is put an end to and direct relationship has been provided between the workmen and the principal employer. Thereby, the G principal employer directly becomes responsible for taking the services of the workmen hitherto regulated through the contractor. [648-BH; 649A]

Dena Nath and Ors. v. National Fertilizers Ltd. and Ors., [1992] 1 SCC 695, overruled.

A The Standard-Vacuum Refining Co. of India v. Its Workmen & Ors., [1960] 3 SCR 466; Security Guanis Board for Gmater Bombay and Thane District v. Security & Personnel Service Pvt. Ltd. & Ors., [1987] 3 SCC 413;

I Sankar Mukhe1jee & Ors. v. Union of India & Ors., AIR (1990) SC 532; National Federation of Railway Porters, Vendors & Bearers v. Union of India B & Ors., [1995] 3 SCC 152; Anadi Mukta v. V.R. Rudani, [1989] 2 SCC 691;

Unni Krishnan v. State of A.P., [1993] 1 SCC 645 and Comptroller &Auditor General of India v. K.S. Jagannathan, [1986] 2 SCC 679, referred to.

12. The legal right of an individual may be founded upon a contract or a statute or an instrument having the force of law. For public law C remedy enforceable nnder Article 226 of the Constitution, the action of the authority need to fall in the realm of public law - be it a legislative act of the State, an executive act of the State or an instrumentality or a person or authority imbued with public law element. The question requires to be determined in each case. However, it may not be possible D to generalise the nature of the action which would come either nnder public law remedy or private law field nor is it desirable to give exhaustive list of such actions. [650-CDl

13. The public law remedy given by Article 226 of the Constitntion E is to issne not only the prerogative writs provided there but also any order or direction to enforce any of the fundamental rights and "for any other purpose'. The distinction between public law and private law remedy by judicial adjudication gradually marginalised and became obliterated. [649.E-F]

LL C. v. Escourts Ltd. & Ors. [1986] 1 SCC 264; M. C. Mehta & Ors.

v. Union of India & Ors., [1987] 1 SCC 395; Calcutta Gas Co. Ltd. v. State of West Bengal, AIR (1961) SC 1044; Mulchand v. State of M.P., AIR (1968) SC 1218; State of West Bengal v. V.K. Manda! & Ors., AIR (1962) SC 779; New Marine Coal Co. Ltd. v. Union of India, [1964] 2 SCR 859; Gujarat G State Financial CDlporation v. Lotus Hotel, [1983] 3 SCC 370; Mahabir Auto Store v. Indian Oil Corporation, [1990] 3 SCC 752; Shreelekha Vidyarthi v.

State of U.P., [1991] 1 .>CC 212; Gillie v. West Noifolk and Wisbech Area Health Authority, (1986) AC 112; Dr. Roy v. Kensinstone and Chelsea Family Practioners Committee, (1992) IAC 624 and R.K. Panda & Ors. v. Steel H Authority of India & Ors., [1994] 5 SCC 304, referred to.

AIR INDIASTATIJTORY CORPN. v. UNION LABOUR UNION 591

14. The founding fathers placed no limitation or fetters to the power A of the High Court under Article 226 of the Constitution except self-imposed limitation. The arm of the Court is long enough to reach injustice wherever it is found. The Court as sentinal in the qui vive is to mete out justice in I given facts. On finding that either the workmen were engaged in violation of the provisions of the Act or were continued as contract labour, despite B prohibition of the contract labour under Section 10(1), the High Court has, by judicial review as the basic structure, constitutional duty to enforce the law by appropriate directions. It would, therefore, be necessary that instead of leaving the workmen in the lurch, the Court would properly mould the relief and grant the same in accordance with law. Though there is no express provision in the Act for absorption of the employees whose conc tract labour system stood abolished by publication of the notification under Section 10(1) of the Act, in a proper case, Conrt as sentinal in the qui vive is required to direct the appropriate anthority to act in accordance with law and submit a report to the Court and based thereon proper relief should be granted. [649-C-E; 654-C-D] D

Indira Gandhi v. Raj Narayan, AIR (1975) SC 2299 and S.R. Bommai

v. Union of India, [1994] 3 SCC 1, referred to.

15. All the workmen in the respective services working on contract E labour are required to be absorbed in the establishment of the appellant.

Though there exists no specific scale of pay to be paid as regular employees, it is for the establishment to take such steps as are necessary to prescribe scale of pay like class 'D' employee. There is no irnjJediment in the way of the appellants to absorb them in the last grade, namely, grade IV employees on regular basis. It is seen that the criteria to abolish the F contract labour system is the duration of the work, the number of employees working on the job etc. That would be the indicia to absorb the emp.loyees on regular basis in the respective services in the establishment.

Therefore, the date of engagement will be the criteria to determine their inter se seniority. In case, there would be any need for retrenchment of any G excess staff, necessarily, the principle of "last come, first go" should be applied subject to his re-appointment as and when the vacancy arises. The -- award proceedings as suggested in Gujarat Electricity Board case are beset with several incongruities and obstacles in the way of the contract labour for immediate absorption. Since the contract labour gets into the service of the principal employer, the Union of the existing employees may not H

A espouse their cause for reference under Section 10 of the ID Act. The workmen on abolition of contract labour system have no right to seek reference under Section 10 of the ID Act. Moreover, the workmen immediately are kept out of job to endlessly keep waiting for award and thereafter resulting in fnrther litigation and delay in enforcement. The B management would always keep them at bay for absorption. It would be difficult for them to work out their right. Moreover, it is a tardy and time-consuming process and years would role by. Without wages, they cannot keep fighting the litigation endlessly. The right and remedy would be a teasing illusion and would be rendered otiose and practically compell ing the workman at the mercy of the principal employer. Considered from C this pragmatic perspective, the remedy carved out in Gujarat Electricity Board case would be unsatisfactory. In the judgments nnder appeal, High

Court has directed to absorb the services of the workmen from the date of the judgment. The respondent-Union did not challenge it. Therefore, the benefit to the employees of the respondent-Union from the date of the D abolition of the contract labour system cannot be granted. The direction issned by the fligh Court to regularise their services with effect from the respective dates of judgments of the High Court with all consequential benefits is therefore upheld. [654-G-H; 665-AH]

Gujarat Electricity Board v. Hind Mazdoor Sabha & Ors., (1995] 5 E sec 21, partly overruled.

Per Majmudar, !. (Concurring)

1. On abolition of contract lab.our system from any establishment under Section 10 of the Act by the appropriate Government the logical and F legitimate consequences thereof will be that the erstwhile regulated con tract labour covered by the sweep of such abolition for the concerned activities would be entitled to be treated as direct employees of the employer on whose establishment they were earlier working and they would be entitled to be treated as regular employees at least from the day on G which the contract labour system in the establishment for the work which they were doing gets abolished. (662-AB]

2. Under the Contract Labour (Regulation and Abolition) Act, 1970 twin methodology had been adopted by the legislature. In the first instance, it sought to regulate contract labour employed in any establishment H wherein snch labour was not of a perennial nature but had to be regulated -

AIR JNDIASTATIJTORY CORPN. v. UNION LABOUR UNION 593

so that the right to life available to workmen as per Article 21 would not be A rendered illusory. Various welfare measures have been provided by the Act in connection with such regulations. The contract workers \tho are engaged by the contractor for the benefit of the principal employer are brought within the beneficial sweep of Chapter V of the Act. This is one facet of the Act. The other object of the Act is to abolish the contract labour system. In B cases where the contract labour is employed on a writ which is of perennial natnre; that is to say, it is of sufficient duration having regard to the nature of industry, trade, business, manufacture or occupation that is carried on in the establishment of the principal employer. (666-E-G; 667-C-D)

3. The qnestion is whether after abolition of contract labour system, C the contract labourers who were earlier having regulatory protections would be rendered persona non grata and would be thrown out from the establishment and told off the gates. Then in such a case the remedy of abolition of contract labour would be worse than the disease and it has to be held that the legislature while trying to improve the lot of erstwhile D contract labourers who are doing work of perennial nature for the principal employer and are doing work which is otherwise to be done by regular workmen had really left them in the lurch by making them lose all the facilities available to contract labour ou the establishment as per Chapter V and desired them to wash their hands off the establishment and get out and face starvation. It is axiomatic that if they continued to be contract E labourers their wages would have been guaranteed under Section 21 of the Act with an obligation oii the principal employer to pay them if the contractor fails to discharge his obligation in connection with payment of wages. (658-A-D)

4. Wages are the livelihood of workman and his large number of departments. If on abolition of contract labour system, contract labour itself is to be abolished, it would cause economic ruin and economic death

to contract labourer and his dependentB for amelioration of whose lot, order under Section 10 is to be passed. If it is held that on abolition of contract labour system, the erstwhile contract labourers are to be thrown G out of the establishment lock, stock and barrel, it would amount to throwing the baby out with the bath water. That obviously cannot be the scope, ambit and purport of Section 10 of the Act. (658-D-F]

5. When the contract workers carry out the work of the principal H

A employer which is of a perennial nature and if provisions of Section 10

gets attracted and such contract labour system in the establishment gets abolished on fulfilment of the conditions requisite for that purpose, it is obvious that the intermediary contractor vanishes and along with him vanishes the term 'principal employer'. Unless there is a contractor agent

B there is no principal. Once the contractor intermediary goes the term 'principal' also goes with it: Then remains ont of this tripartite contractual scenario only two parties the beneficiaries of the abolition of the erstwhile contract labour system i.e. the workmen on the one band and the employer on the other who is no longer the principal employer but necessarily becomes a direct employer for these erstwhile contract labourers. Implicit C in the provision of Section 10 is the legislative intent that on ab.iliiion of contract labour system, the erstwhile contract-workmen would become direct employees of the employer on whose establishment they were earlier working and were enjoying all the regulatory facilities on that very establishment under Chapter V prior to the abolition of such contract labour D system. [658-G-H; 659-A-D]

6. Though the legislature has expressly not mentioned the consequences of such abolition, but the very scheme and ambit of Section 10 of the Act clearly indicate the inherent legislative intent of making the erstwhile contract labourers direct employees of the employer on abolition E of the intermediary contractor. The very condition engrafted in Section

10(2) (d) shows that while abolishing contract labour from the given estab lishment, one of the relevant consideration for the appropriate Government is to ascertain whether it is sufficient to appoint considerable number of whole time workmen. Even otherwise there is an inbuilt safety valve in F Section 21 of the Act which enjoins the principal employer to make payment of wages to the given number of contract workmen whom be has permitted to be brought for the work of the establishment if the contractor . fails to make payment to them. It is, therefore, obvious that the principal employer as a worldly businessman in his practical commercial wisdom would not allow contractor to bring larger number of contract labour G which may be in excess of the requirement of the principal employer. On

the contrary, the principal employer would see to it that the contractor brings only those number of workmen who are required to discharge their duties to carry out the work of the principal employer on his establishment through, of course, the agency of the contractor. In fact the scheme of the H Act and regulations framed there-under clearly indicate that even the

AIR INDIA ST A TUIDRY CORPN. v. UNION l.ABOUR UNION 595

number of the workmen required for the given contract work is to be A specified in the licence given to the contractor. Consequently, the aforesaid apprehension projected on behalf of the principal employer is more imagi nary than real. Even apart from that, after the absorption of the erstwhile contract workmen by the principal employer on abolition of the contract labour system under Section IO, it is always open for the employer as an entrepreneur, in an appropriate case, if the excess working staff is not found to be required by him to retrench such excess staff in accordance with law by following the provisions of the Industrial Disputes Act, 1947.

But that has nothing to do with the moot question as to what is the fate of erstwhile contract labour on abolition of contract labour system under the provisions of Section 10 of the Act. (659-E-H; 660-A-D] C

Gujarat Electricity Board, Thennal Power Station, Ukai, Gujarat v.

Hind Mazdoor Sabha & Ors., (1995] S SCC 27, partly overruled.

7. Engagement of contract labour has been found to be unjustified D by a catena of decisions of this Court. When the work is of perennial nature and instead of engaging regular workmen, the system of contract labour is resorted to, it would only be for fulfilling the basic purpose of securing monetary advantage to the principal employer by reducing . expenditure on work force. It would obviously be an unfair labour \practice and is also an economically short-sighted and unsound policy, E both from the point of view of the undertaking concerned and the country as a whole. Such a system was tried to be put to an end by the legislature by enacting the Act but when it found there are certain activities of establishment where the work is not of perennial nature then the contract labour may not be abolished but still it would be required to be regulated so that the lot of the workmen is not rendered miserable.

The real scope and ambit of the Act is to abolish contract labour system as far as possible from every establishment. Consequently, on abolition which is the ultimate goal, the erstwhile regulated contract labour cannot

be thrown out of establishment as tried to be submitted on behalf of the G management taking resort to the express language of Section 10 of the Act. Such a conclusion reached by the two-Member Bench in Dena Nath's case flies in the face of the very scope and ambit of the Act and frustrated the very scheme of abolition of contract labour envisaged by the Act. [660-G-H; 661-AC] H

A Dena Nath v. National Fe1ti/izers Ltd., [1992) I SCC 695, overruled.

R.K Panda & On. v. Steel Autho1ity of India & Ors., [1994) 5 SCC 304, referred to.

CfVIL APPELLATE .JURISDICTION: Civil Appeal No. 15535 of B 1996 etc.

From the Judgment and Order dated 28.4.92 of the Bombay High Court in A. No. 146 of 1990.

Ashok Desai, Attorney General, T.R. Andhyarujina, Solictor C General, P.P. Malhotra, Ms. Indra Jaising, K.K. Singhvi, Sr. Advs., M.D.

Sisodia, K. Swamy, Lalit Bhasin, Ms. Nina Gupta, Ms. Kiran Bhardwaj, Vineet Kr., Ms. Ethel Pereira, Ms. Ritu Makkar, P.P. Singh, G. Nageswara Reddy, C.V.S. Rao, Ms. Anil Katiyar, Ms. Anita Shenoi, Sanjay Parikh, B.N. Singhvi, Sanjay Singhvi, Anil K. Gupta, Ms. Pushpa Singhvi, T. Srid- D haran, P.K. Manohar, S.R. Bhat, Brij Bhushan, R.N. Keshwani, Ms. C.

Ramamurthy and A.K. Sanghi for the appearing parties.

The following Judgments of the Court were delivered by

K. RAMASWAMY, J .. Leave granted.

These appeals by special leave arise from the judgment of the Division Bench of the Bombay High Court dated April 28, 1992 made in Appeal No. 146 of 1990 and batch. The facts in appeal arising out of S.L.P. 7417/92, are sufficient to decide the questions of law that have arisen in these appeals. The appellant initially was a statutory authority under inter- F national Airport Authority of India Act, 1971 (for short, '!AA! Act') and on its repeal by the Airports Authority of India Act, 1994 was amalgamated with National Airport Authority (for short, the 'NAA') under single nomenclature, namely, !AA!. The IAAI is now reconstituted as a company under Companies Act, 1956.

G The appellants engaged, as contract labour, the respondent union's members, for sweeping, cleaning, dusting and watching of the buildings owned and occupied by the appellant. The Contract Labour (Regulation and Abolition) Act, 1970 ( for short, the 'Act') regulates registration of the establishment of principal employer, the contractor engaging and supplying H the contract labour in every establishment in which 20 or more workmen

AIR INDIASfATIITORY CORPN. ' UNION !ABOUR UNION (KRAMASWAMY, J.) 597

are employed on any day of the preceding 12 months as contract labour. A The Act had come into force from September 5, 1970. The appellant had 9btained on September 20, 1971 a certificate of registration from Regional Labour Commissioner (Central) under the Act. The Central Government exercising the power under Section 10 of the Act, on basis of recommendation and in consultation with the Central Advisory Board constituted B under Section 10(1) of the Act, issued a notification on December 9, 1976 prohibiting "employment of contract labour on and from December 9, 1976 for sweeping, cleaning, dusting and watching of buildings owned or occupied by the establishments in respect of which the appropriate government under the said Act is the Central Government." However, the said prohibition was not to apply to "outside cleaning and other maintenance operations of multistoreyed buildings where such cleaning or maintenance cannot be carried out except with specialised experience." It would appear

that Regional Labour Commissioner (Central) Bombay by Jetter dated January 20, 1972 informed the appellant that the State Government is the appropriate Government under the Act. Therefore, by proceedings dated D May 22, 1973 the Regional Labour Commissioner (Central) had revoked the registration. By Amendment Act 46 of 1982, the Industrial Disputes Act, 1947 (for short, the 'ID Act') was made applicable to the appellant and was brought on statute book specifying the appellant as one of the industries in relation to which the Central Government is the appropriate E Government and the appellant has been carrying on its business "by or under its authority" with effect from August 21, 1982. The Act was amended bringing within its ambit the Central Government as appropriate Government by amendment Act 14 of 1986 with effect from January 28, 1986.

Since the appellant did not abolish the contract system and failed to enforce the notification of the Government of India dated December 9, 1976, the respondents came to file writ petitions for direction to the appellant to enforce forthwith the aforesaid notification abolishing the G contract labour system in the aforesaid services and to direct the appellant to absorb all the employees doing cleaning, sweeping, dusting, washing and watching of the buildings owned or occupied by the appellant-establishment, with effed from the respective dates of their joining as contract labour in the appellant's establishment with all consequential rights/benefits, monetary or otherwise. The writ petition was allowed by the H

A learned single Judge on November 16, 1989 directing that all contract workers be regularised as employees of the appellant from the date of filing of the writ petition. Preceding thereto, on November 15, 1989, the Government of India referred to the Central Advisory Board known as Mobile Committee under Section 10(1), which recommended to the Central

B Government not to abolish the contract labour system in the aforesaid services. Under the impugned judgment dated April 3, 1992, the learned judges of the Division Bench dismissed the appeal. Similar was the fate of other appeals. Thus these appeals by special leave.

Shri Ashok Desai, the learned Attorney General, Shri Andhyarujina, C the learned Solicitor General, appearing for Union of India and the appellant respectively, contended that the term "appropriate Government" under Section 2(1)(a) of the Act, as on December 9, 1976, was the State Government. The appellant was not carrying on the business as an agent of the Central Government nor the Central Government was its principal.

This Court, in Heavy Engineering Mazdoor Union v. The State of Bihar & D Ors., [1969] 3 SCR 995 (for short, the "Heavy Engineering case"), had interpreted the phrase "the appropriate Government" and held that the .

Central Government was not the appropriate Government under the ID Act. The ratio therein was followed in Hindustan Aeronautics Ltd. v. 171e Workmen & Ors., [1975] 4 SCC 679; Rashtriya Mill Mazdoor Sangh v. Model Mills, Nagpur & Anr., [1984] Supp. SCC 443 and Food Corporation of India E Workers' Union v. Food Corporation of India & Ors., [1985] 2 SCC 294. It is thus firmly settled law that the appropriate Government was not the Central Government untill the Act was amended with effect from January 28, 1986. Therfore, the view of the High Court that the appropriate Government is the Central Government is not correct in law. The learned Attorney General further argued that the interpretation of this Court in F Heavy Engineering case has stood the test of time and the parties have settled the transaction on its basis. It would, therefore, not be correct to upset that interpretation. The learned Solicitor General contended that the notification published by the Central Government under Section 10 of the Act on December 9, 1976 was without jurisdiction. The Advisory Board G independently should consider whether the contract labour in each of the aforestated services should be abolished taking into consideration the perennial nature of the work, the requirement of number of employees is the respective specified services in the establishment of the appellant. The Advisory Board had not adverted to the prescribed criteria of Section 10(2) to the appellant's establishment. Mobile Committee after detailed examina- H

AIRINDIASTATIJTORY CORPN. "· UNION LABOUR UNION (K.RAMASWAMY, J.] 599

tion, had recommended to the Central Government not to abolish the A contract labour system in the afore.., aid services. It was contended that the notification dated December 9, 1976 is without authority of law or, at any rate, clearly illegal; and so that direction by the High Court to enforce the offending notification is not correct in law. It was further contended that, after the Amendment Act had come into force from January 28, 1986, the Central Government being the appropriate Government, had accepted the B recommendation of Mobile Committee of not abolishing the contract labour system. The notification dated December 9, 1976, no longer remained valid for enforcement. The High Courf, therefore was not right in directing the appellant to enforce the notification. Alternatively, it was contended that even assuming that the notification is valid and enforceable, C it would be effective only from January, 1986. However, by abolition of contract labour system, the workmen would not automatically become the employees of the appellant. In Dena Nath and Ors. v. National Fertiliser Ltd. and Ors., [1992] 1 SCC 695, this Court had held that the High Court, in exercise of its power under Article 226, has no power to direct absorption of the contract labour as its direct employees. The impugned judgment D was expressly disapproved in Dena Nath's case. Therefore, its legality has been knocked off its bottom. It was further contended that the Act, on abolition of the contract labour system, does not envisage to create direct relationship between the principal employer and the contract labour. The erstwhile contract Jabour have to seek and obtain industrial award under the ID Act by virtue of which the appellant would be entitled to satisfy the E Industrial Court that there was no need to absorb all the contract labour but only smaller number is required as regular employees. On recording finding in that behalf, the Industrial Court would make bis award which would be enforceable by the workmen. This Court in Gujarat Electricity Board v. Hind Mazdoor Sabha & Ors., [1995] 5 SCC 27 had pointed out the lacuna in the Act and given directions of the manner in which the in- F dustrial action has to be taken on abolition of the contract labour system.

The High Court, therefore, was not right in its direction that the workmen require to be absorbed in the respective services of the establishment of • the appellant. It is also contended that the appellant, though initially was a statutory Corporation under the !AA! Act, on its abolition and constitution as a company, is entitled to regulate its own affairs on business G principles and the direction for absorption would lead to further losses in which it is being run. The learned Solicitor General bas, therefore, submitted a scheme under which its subsidiary, namely, Air Cargo Corporation would take the workmen and absorb them into service, subject to the above regulation. It has to consider as to how many of the contract labour require H

A to be absorbed. Prescription of qualification for appointment was necessary the principle of reservation adopted by the Central Government requires to be followed; their names require to be called from Employment Exchange. The workmen should be absorbed on the principle of "last come first go" subject to their fitness, qualifications and probation etc.

B Shri K.K. Singhvi and Mrs. Indira Jai Singh, learned senior counsel and AK. Gupta learned counsel for the respondents, contended that the appellant is an industry carrying on its business of Air Transport Services.

Prior to the !AA! Act, it was under the control of Civil Aviation Department, Government of India; after the !AA! Act, the appellant has been C carrying on its industry by or under the authority of the Central Government. The relevant provisions in the !AA! Act would establish the deep and pervasive control the Central Government has over the functions of the appellant. Whether the appellant is an industry carrying on business by or under the authority of the Central Government, must be determined D keeping in view the language of the statute that gave birth to the Corporation, and the nature of functions under the !AA! Act etc. The appellant's working sy; tem under the !AA! Act and the control the Central Government is exercising over the working of the industry of the appellant do indicate that right from its inception the appellant has been carrying on its E business, by or under the authority of the Central Government. Rightly understanding that legal position, the Central Government had referred the matter to the Central Advisory Board under Section 10(1) of the Act and on the basis of its report had issued the notification dated December 9, 1976 abolishing the contract labour system in the aforestated services.

F Therefore, it is valid in law. The Bench in Heavy Engineering case, narrowly construed the meaning of the phrase "the appropriate Government" placing reliance on the common law doctrine of "principal and agent". The public law interpretation is the appropriate principle of construction of the phrase "the appropriate Government". In view of internal evidence provided in the !AA! Act and the nature of the business carried on by the appellant by or G under the control of the Central Government, the appropriate Government is none other than the Central Government. In particular, after the development of law of "other authority" or "instrumentality of the State" under Article 12 of the Constitution, the ratio in Heavy Engineering case is no longer good law. In Hindustan Aeronauties Ltd. and Food Corporation H . of India cases, this Court had not independently laid any legal preposition.

AIRINDIASTATUTORYCORPN." UNION LABOUR UNION(K.RAMASWAMY, J.] 601

Food Corporatio11 of India's case was considered with reference to the A regional warehouses of the FCI situated in different States and in this functional perspective, this Court came to the conclusion that the appropriate Government would be the State Government.

This Court in Sukhdev Singh & Ors. v. Bhagatram Sardar Singh & B Anr., [1975] 3 SCR 619; R.D. Setty v. Airp01t Authority & Ors., [1979] 3 SCR

1014; Ma11aging Director, U.P. Warehousi11g Co1poratio11 & Anr. v. VN.

Vajpayee, (1980] 2 SCR 773; Ajay Hasia Etc. v. Khalid Mujib Sehravardi & Ors. Etc., [1981] 2 SCR 79 - wealth of authorities - had held that settled legal position would lend to interpret the phrase "appropriate Government" C in public law interpretation; under the Act the Central Government is the appropriate Government to take a decision under Section 10 of the Act to abolish the contract labour system. It is further contended that the Central Government, after notifying abolition of contract labour system is devoid of power under Section 10(1) to appoint another Advisory Board to consider whether or not to abolish the same contract labour system in the , D aforesaid services in the establishments of the appellant. The recommendation of the Mobile Committee and the resultant second notification were, therefore, without authority of law. The two Judge Benches in Dena Nath and Gujarat Electricity Board's cases have not correctly interpreted the law.

After abolition of the contract labour system, if the principal employer E omits to abide by the law and fails to absorb the labour worked in the establishments of the appellant on regular basis, the workmen have no option but to seek judicial redress under Article 226 of the Constitution.

Judicial Review being the basic feature of the Constitution, the High Court is to have the notification enforced. The citizen has a fundamental right to F seek redressal of their legal injury by judicial process to enforce his rights in the proceedings under Article 226. The High Court, therefore, was right to dwell into the question and to give tile impugned direction in the judgment. The workmen have a fundamep.tal }'ight to life. Meaningful right to life springs from continued work t9 earli their livelihood. The right to employment, therefore, is an integral facet of right to life. When they were G engaged as contract labour and were continuously working in the establishments of the appellant, to make their right to social and economic justice meaningful and effective, they required to be continuously engaged as contract labour so long as the work is available in the establishment.

When work is of perennial nature and on abolition of contract labour H

A system, they are entitled, per force, to be absorbed on regular basis transposing their erstwhile contractual status into that of an employeremployee relationship so as to continue to take out their livelihood by working under the employer and be entitled to receive salary prescribed to that post. Thereby they became entitled to be absorbed without any B hiatus with effect from the date of abolition. If any action is needed to be taken thereafter against the employee, it should be only in accordance with either the statutory rules or the ID Act, if applicable. In either event, the right to absorption assures to the workmen the right to livelihood as economic empowerment, right to social justice and right to dignity of person which are the concomitants of social democracy. These facets of C constitutional rights guaranteed to the workmen as their Fundamental Rights should be kept in view in interpreting the expression "appropriate Government" and the duty of the appropriate Government enjoined under Section 10(1) of the Act a!ld other regulatory provisions in relation to the employment of the workmen. Therefore, the view in Dena Nath's case is D not correct in law and requires to be overruled.

There is no hiatus in the operation of the Act on abolition of the Contract labour system under Section 10. The object and pureose of the Act are two-fold. As long as the work in an industry is not perennial, the E Act regulates the conditions of the workmen employed through the contractor registered under the Act. The services of the workmen are channelised through the contractor. The principal employer is required to submit the number of workmen needed for employment in its establishment who are supplied by the contractor, an intermediary; but the primary

F responsibility lies upon the principal employer to abide by law; the violation thereof visits With penal consequences. The Act regulates systematic operation. Wages to the contract labour should be paid under the direct supervision of the principal employer. The principal employer is enjoined to compel the contractor to pay over the wages and on his failure, the principal employer should pay and recover it from the contractor/inter- G medkry. The principal employer alone is required to provide safety, health and other amenities to ensure health and safe working conditions in the establishment of the principal employer. This would clearly indicate the pervasive control the principal employer has over the contract labour employed through intermediary and regulation of the work by the workmen H during the period of service. On advice by the Board that the work is of

AIRINDIASfATITTORYCORPN.•. UNION LABOUR t:NION (KRAMASWAM\, J.) 603

perennial nature etc. and on being satisfied of the conditions specified A under Section 10(2), the appropriate Government takes a decision to abolish the contract labour and have the decision published by a notification. It results in abolition of the contract labour. Consequently, the linkage of intermediary/contractor is removed from the operational structure under the Act. It creates direct connection between the principal employer and B the workmen. There is no escape route for the principal employer to avoid workmen because it needs their services and the workmen are not meant to be kept in the lurch. The words "principal employer" do indicate that the intermediary/contractor is merely a supplier of labour to the principal employer. On effacement of the contractor by abolition of the contract C labour system, a direct relationship between the principal employer and the workmen stands knitted. Thereby the workman becomes an employee of the principal employer and it relates back to the date of engagement as a contract labour. The details of the workmen, requirement of the work force, duration of the work etc. are regulated under the Act and the Rules. D The Act, Rules and statutory forms do furnish internal and unimpeachable evidence obviating the need to have industrial adjudication; much less there arises any dispute. There is no machinery for workmen under the ID Act to seek industrial adjudication. If any industrial adjudication is to be sought, it would be only by a recognised union in the establishment of the E appellants who are unlikely to espouse their dispute. Therefore, the methodology suggested in Gujarat Electricity Board's case, by another Bench of two Judges apart from being unworkable and incongruous, is not correct in law. On abolition of the contract labour, the principal employer is left with no right but duty to enforce the notification, absorb the workmen working in the establishment on contract basis transposing them as its regular employees with all consequential rights and duties attached to a post on which the workman working directly under the appellant was entitled or liable. The Act gave no option to pick and choose the employees

at the whim of the principal employer. The view of the High Court, therefore, is correct to the extent that the notification should be enforced G with effect from the date of abolition, namely, December 9, 1976. The subsequent amendment with effect from January 28, 1986 is only a recognition of and superimposition of pre-existing legal responsibility of the Central Government as the appropriate Government. It does not come into being only from the date the amendment came into force. Consequently, H

A the workmen, namely, the memberlV'f the respondent Union must be.

declared to be the employees with effect from the respective dates on which they were discharging their duties in the respective services of the appellant's establishments either as Sweeper, Duster, Cleaner, Watchman etc. The view, therefore, of ti)e High Court to the extent that they should B be absorbed with effect from the date of the judgment of the learned single Judge, is not correct in law. Therefore, to do complete justice, direction may be given to absorb the workmen with effect from the date of abolition, i.e., December 9, 1976 under Article 142 of the Constitution.

The respective contentions would give rise to the following ques- C lion~:

1. What is meaning of the word "appropriate Government under Section 2(1)(a) of the Act?

2. Whether the view taken in Heavy Engi.neering case is correct in D law?

3. Whether on abolition the contract labour are entitled to be absorbed; if so, from what date?

4. Whether the High Court µnder Article 226 has power to direct E their absorption; if so, from what da(e?

5. Whether it is necessary to make a reference under Section 10 of the ID Act for adjudication of dispute qua absorption of the contract labour?

6. Whether the view taken by this Court in Dena Nath and Gujarat F State Electricity Board's case is correct in law.?

7. Whether the workmen have got a right for absorption and, if so, what is the remedy for enforcement?

Section 2(1)(a) of the Act defines "appropriate Government" to G mean

""(i) in relation to an establishment in respect of which the appropriate Government under the Industrial Disputes Act, 1947 (Act 14 of 1947), is the Central Government, the Central Government;

(ii) in relation to any other establishment, the Government of the

AIR !NDIASTATIJTORY CORPN.>. UNION !ABDUR UNION (K.RAMASWAMY, J.) 605

State in which that other establishment is situated"

Prior to Amendment Act 14 of 1986, the definition was as under :

"2(1)(a) "Appropriate Government" means-

(1) in relation to -

(i) 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 of the State in which that other establishment is situate."

Section 2(a)(i) of the ID Act defines "appropriate Government" thus; Unless there is anything repugnant in the subject or context, "appropriate Government" means, iµ relation to any Ind trial Disputes concerning any industry carried on by or under the authority of the Central Government or by a railway company for concerning any such controlled industry as may be specified in this behalf by the Central Government .... " and Indian Airlines and Air India Corporation established under Section 3 of the Air Corporation Act 1953 are enumerated industries under Amendment Act 46 of 1982 which came into force with effect from 21.8.1984.

In Heavy Engineering case (supra), industrial dispute was referred under Section 10 of the ID Act by the State Government of Bihar to the G Industrial Tribunal for its . adjudication. The competency of the State Government was questioned by the Mazdoor Union contending that the appropriate Government to refer the dispute was the Central Government.

The High Court negatived the contention and had upheld the validity of reference. On appeal, a Bench of two Judges had held that the wqrds H

A "under authority of' means pursuant to the authority, such as an agent or a servant's acts under or pursuant to the authority of its principal or master.

The Heavy Engineering Company cannot be said to be carrying on its business pursuant to the authority of the Central Government. Placing reliance on common law interpretation, the Bench was of the opinion that B the Company derived its powers and functions from its Memorandum and Articles of Association. Though the entire share capital was contributed by the Central Government and all the shares were held by the President and officers of the Central Government were in-charge of the management, it did not make any difference. The company and the share-holders are distinct entities. The fact that the President of India and certain officers C hold all its shares did not make the company an agent either of the President or of the Central Government. The power to decide how the company should function; the power to appoint Directors and the power to determine the wages and salaries payable by the company to its employees, were all derived from the Memorandum of Company and D Articles of Association of the .Company and not by the reason of the Company being agent of the Central Government. The learned Judges came to that conclusion on the bais of concession and on private law of principal and agent and as regards a company registered under the Companies Act, on the basis of the power of internal management. In Hindustan E Aeronautics Ltd case (supra), learned Judges merely followed the ratio of "

Heavy Engineering case. It further concluded that the enumeration of certain statutory Corporations in the definition would indicate that those enumerated Corporations would come within the definition of the "appropriate Government" without any further discussion. In Rashtriya Mill Mazdoor Sangh's case, a Bench of three Judges, while interpreting Section F 32(iv) of the Payment of Bonus Act, considered the purpose of the expression "unrler the authority of any department of the Central Government for purpose of payment of bonus". The meaning and scope of the expression "industry carried on by or under the authority of any department of the Central Government", was examined and it was held that the industrial G undertaking retains its identity, personality, and status unchanged though in its management, the Central Government exercised the power to give a direction under Section 16 and the management is subjected to regulatory control. It is seen that the above decision was reached in the context in which the payment of bonus was to be determined and paid to the H employees by the department. In Food Corporation of In, dia's case (supra),

AIRINDIASfATlITORYCORPN.>. UNIONIABOURUNION[KRAMASWAMY, J.) 607

a Bench of two Judges was to consider whether regional office of the Food A Corporation of India and the warehouses etc. were an "establishment" within the meaning of Section 2(i)( e) of the Act and whether FCI is an industry carried on by or under the authority of the Central Government.

Following the aforesaid three decisions, it was held that a bare reading of the definition would indicate that the "establishment" defined under the Act B means inter alia any place, any industry, trade, business, manufacture warehouse, godown or the place set up by the Corporation where its business is carried on. Though for the purpose of industrial disputes the Central Government is an appropriate Government in relation to Food Corporation of India, its establishments at various places is not under the control of the Government of India. Therefore, appropriate Government under the Industrial Disputes Act is the State Government. In that behalf, c

the learned Judges, undoubtedly, relied upon Heavy Engineering case. It would thus be seen that the construction adopted on the phrase "appropriate Government" under the ID Act was considered with reference to its functional efficacy. The Heavy Enginee1ing case, as held earlier, had D proceeded on common law principles and the concession by the counsel.

As noted, the appellant, to start with, was a statutory authority 'Jut pending appeal in this Court, due to change in law and in order to be in tune with open economy, it became a company registered under the E Companies Act. To consider its sweep on the effect of Heavy Engineering case on the interpretation of the phrase 'appropriate Government', it would be necessary to recapitulate the Preamble, Fundamental Rights (Part Ill) and Directive Principle (Part IV) - trinity setting out the conscience of the Constitution deriving from the source "We, the people", a charter to establish an egalitarian social order in which social and economic justice with dignity of person and equality of status and opportunity, are assured to every citizen in a socialist democratic Bharat Republic. The Constitution, the Supreme law heralds to achieve the above goals under the rule of

law. Life of law is not logic but is one of experience. Constitution provides an enduring instrument, designed to meet the changing needs of each G succeeding generation altering and adjusting the unequal conditions to pave way for social and economic democracy within the spirit drawn from the Constitution. So too, the legal redressal within the said parameters. The words in the Constitution or in an Act are but a framework of the concept which may change more than the words themselves consistent with the H

A march of law. Constitutional issues require interpretation broadly not by play of words or without the acceptance of the line of their growth. Preamble of the Constitution, as its integral part, is designed to realise socio economic justice to all people including workmen, harmoniously blending the details enumerated in the Fundamental Rights and the Direc- B tive Principles. The Act is a social welfare measure to further the general interest of the community of workmen as opposed to the particular interest of the ind.ividual entrepreneur. It seeks to achieve a public purpose, i.e., regulated conditions of contract labour and to abolish it when it is found to be of perennial nature etc. The individual interest can, therefore, no C longer stem the forward flowing tide and must, of necessity, give way to the broader public purpose of establishing social and economic democracy in which every workman realises socio-economic justice assured in the Preamble, Articles 14, 15 and 21 and the Directive Principles of the Constitution.

D The founding fathers of the Constitution, cognizant of the reality of life wisely engrafted the Fundamental Rights and Directive Principles in Chapters III and IV for a democratic way of life to every one in Bharat Republic, the State under Article 38 is enjoined strive to promote the welfare of the people by securing and protecting as effectively as it may, a social order in which justice, social, economic and political shall inform all E the institutions of the national life and tu minimise the inequalities in income and endeavour to eliminate inequalities in status, facilities and opportunities, not only amongst individuals but also amongst groups of people residing in different areas or engaged in different vocations. Article 39(a) provides that the State shall direct its policies towards securing the

F citizens, men and women equally, the right to an adequate means of livelihood; clause ( d) provides for equal pay for equal work for both men and women; clause ( e) provides to secure the health and strength of workers. Article 41 provides that within the limits of its economic capacity and development, the State shall make effective provision to secure the right to work as fundamental with just and humane conditions of work by G suitable legislation of economic organisation or in any other way in which the worker shall be assured of living wages, conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities to the workmen. The poor, the workman and the common man can secure and realise economic and social freedom only through the right to work and right to adequate means of livelihood, to just and humane H

AIR INDIA STATUTORY CORPN. ' UNION LABOcR UNION (K.RAMASWAMY, J.] 609

conditions of work, to a living wage, a decent standard of life, education A and leisure. To them, these are fundamental facets of life. Article 43A, brought by 42nd Constitution (Amendment) Act, 1976 enjoins upon the State to secure by suitable legislation or in any other way, the participation of workers in the management of undertakings, establishments or other organisations engaged in any industry. Article 46 gives a positive mandate to promote economic and educational interest of the weaker sections of the people. Correspondingly, Article 51A imposes fundamental duties on every citizen to develop the scientific temper, humanism and to strive towards excellence in all spheres of individual and collective activity, so that the nation constantly rises to higher levels of endeavour and achievement. To make these rights meaningful to workmen and meaningful right to life a reality to workmen, shift of judicial orientation from private law principles to public law interpretation harmoniously fusing the interest of

the individual enterprenuer and the paramount interest of the community.

Article 39A furnishes beacon light that justice be done on the basis of equal opportunity and no one be denied justice by reason of economic or other disabilities. Courts are sentinal in the qui vive of the rights of the people, D in particular, the poor. The judicial function of a Court, therefore, in interpreting the Constitution and the provisions of the Act, requires to build up continuity of socio-economic empowerment to the poor to sustain equality of opportunity and status and the law should constantly meet the needs and aspiration oi the society in establishing the egalitarian social order. Therefore, the concepts engrafted in the statute require interpreta- E

tion from that perspectives, without doing violence to the language. Such an interpretation would elongate the spirit and purpose of the Constitution and make the aforesaid rights to the workmen a reality lest establishment of an egalitarian social order would be frustrated and Constitutional goal defeated.

Keeping this broad spectrum in view, let us consider whether the interpretation given in Heavy Engineering case is consistent with the scheme and spirit of the Constitution. In Rajasthan State Electricity Board, Jaipur

v. Mohan Lal & Ors., [1967] 3 SCR 377, a Constitution Bench, composing the learned Judges who formed the Bench in Heavy Engineering case, G considered the issue of interpretation and Bhargava, J. speaking on behalf of the majority, had held that "other authority" within the meaning of Article 12 of the Constitution need not necessarily be an authority to perform governmental functions. The expression 'other authority' is wide enough to include within it every authority created by a statute on which H

A powers are conferred to carry out governmental functions or the "functions

under the control of the Goverrunent". It is not necessary that some of the powers conferred be Governmental sovereign functions to carry on commercial activities. Since the State is empowered under Articles 19(1)(g) and 298 to carry on any trade or business, it was held that Rajasthan State B Electricity Board was "other authority" under Article 12 of the Constitution.

The significance of the observation is that an authority under the control of the State need not carry on Governmental functions. It can carry on commercial activities. At this juncture, it is relevant to keep at the back of our mind, which was not brought to the attention of the Bench which decided Heavy Engineering case, that Article 19(2) of the Constitution C grants to the State, by clause (ii) thereof, monopoly to carry on, by the State or by a Corporation owned or controlled by the State, any trade, business, industry or service whether to the exclusion, complete or partial, of citizens or otherwise. The narrow interpretation strips the State of its monopolistic power to exclude citizens from the field of any activity, to D carry on any trade, business, industry or service, total or partial. A reverse trend which would deflect the constitutional perspective was set in motion by the same Bench in Fraga Tools Corporation v. C. V. !manual, [1969] 3 SCR 773 decided on February 19, 1969, 24 days prior to the date of decision in Heavy Engineering case; in which it was held in main that writ E under Article 226 would not lie against a company incorporated under Companies Act and the declaration that dismissal of the workmen was illegal, given by the High Court was set aside. But the operation of the above ratio was put to stop by the Constitution Bench decision in Sukhdev Singh & Ors. v. Bhagat Ram & Anr., [1975] 2 SCR 619. In that behalf, the F interpretation given by Mathew, J. in a separate but concurrent judgment is of vital significance taken away the State action from the clutches of moribund common law jurisprudence; it set on foot forward march under public law interpretation. Mathew, J. had held that the concept of State had undergone drastic change. It cannot be conceived of simply as a cohesive machinery yielding the thunderbolt of authority. The State is a G service Corporation. It acts only through its instrumentalities or agencies of natural and juridical person. There is a distinction between State action and private action. There is nothing strange in the notion of the State acting through a Corporation and making it an agency or instrumentality of the State with an event of the welfare State. The framework of the civil service H administration became increasingly insufficient for handling new tasks

AlRINDIASTATIJTORYCORPN.,. UN!ONIABOURUNION(K.RAMASWAMY, J.j 611

which were often of a specialised and highly technical character. Develop- A ment of policy of public administration, through separate Corporations which would operate largely according to business principles and separately accountable though under the Memorandum of Association or Articles of Association become the arm of the Government. Though their employees are not civil servants, it being a public authority and State B Corporation, therefore, is subject to control of the Government. The public corporation, being a corporation of the State, is subject to the constitutional limitation as the State itself. The governing power, wherever located, must be subject to the fundamental constitutional limitations. The Court, therefore, had laid the test to see whether the Corporation is an agency or instrumentality of the Government to carry on business for the benefit of C the public. Thus, the ratio in Praga Tools case, no writ would lie against the Corporation is no longer a good law. Though Corporation is not a statutory body, as it is not a authority, it is an instrumentality of the State.

In R.D. Shetty v. International Aiport Authority of India & Ors., [1979] D 3 SCR 1.014, this Court had held that due to expansion of welfare and social service functions, the State increasingly controls material and economical resources in the society involving large scale industrial and commercial activities with their executive functions affecting the lives of the people. It regulates aJld dispenses special services and provides large number of benefits. When the Government deals with the public, it cannot act ar E bitrarily. Where a corporation is an instrumentality or agency of the Government, it would be subject to the same constitutional or public law limitation as the Government. The limitations of the action by the Government must apply equally when such actions are dealt with by Corporation having instrumentality element with public and they cannot act arbitrarily.

F Such a functioning cannot enter into relationship with any person it likes at its sweet will. Its action must be in conformity with some principle which meets the test of reason and relevance. Therefore, the distinction between a statutory corporation and the company incorporated under the Companies Act was obliterated.

In Managing Director, U.P. Warehousing Copn. v. V.N. Vajpayee, [1980] 2 SCR 773, Chinnappa Reddy, J. in his separate but concurrent judgment laid down the relevant principles. The Government establishes

and manages large number of industries and institutions which have become biggest employer and there is no good reason why the Government H

A should not be bound to observe the equality clause of the Constitution in a matter of employment and its dealings with its employees; why the Corporation set up or owned by the Government should not equally be bound and why instead such Corporation would become citadels of patronage and arbitrary action. Such a distinction perhaps would mock at B the Constitution and the people; some element of public employment is all that is necessary to take the employee beyond the reach of rule which denies him the protection of Articles 14 and 16. Independence and integrity of thee!fiployees in the public sector should be secured as much as the independence and integrity of the civil servants. It was, therefore, held that a writ would lie against the warehousing corporation. c

Jn Ajay Hasia Etc. v. Khalid Mujib Sehravardi & Ors. Etc., [1981] 2 SCR 79, a Constitution Bench was to consider whether a Society registered under the J & K Societies Registration Act would be a State under Article 12 of the Constitution amenable to the reach of the writ jurisdiction. The D Constitution Bench laid the following test to determine whether the entity is an instrumentality or agency of the State; (1) if the entire share capital of the corporation is held by the Government, it would go a long way towards indicating that the corporation is an instrumentality or agency or Government; (2) where the financial assistance of the State is so much as to meet almost entire expenditure of the corporation, it would afford some E indication of the corporation being impregnated with governmental character; (3) it must also be relevant factor whether the corporation enjoys monopoly status which is State conferred or State protected; ( 4) existence of deep and pervasive State control may afford an indication that the corp9ration is a State agency or instrumentality; ( 5) if the functions of the F corporation are of public importance and closely related to governmental functions, it would be a relevant factor in classifying the corporation as an instrumentality or agency of Government; ( 6) specifically, if a department of Government is transferred to a corporation, it would be a strong factor supportive of the inference of the corporation being an instrumentality or G agency of Government. In Delhi Transport C01poration v. D. T.C. Mazdoor Corpn., AIR (1991) SC 101, it was held that the State has a deep and pervasive control over the functioning of the society and, therefore, is an agency of the State. In Som Prakash Rekhi v. Union of India & Ors., [1981] 2 SCR 111, it was held that the settled position in law is that any authority under the control of the Government of India comes within the definition H of a State. Burmashell Oil Co. was held to be an instrumentality of the State

AIR INDIA STATUTORY CORPN. ' UNION LABOUR UNION [K.RAMA, WAMY, J.) 613

thou&h it was a Government company. The authority in administrative law A is a body having jurisdiction in certain matters of public nature. Therefore, the ability conferred upon a person by law is to alter his case by his own will directed to that end. The rights, duties and liabilities or other legal relation, either of himself or other persons must be present to make a person an authority. When the person is an agent or functions on behalf B of the State, as an instrumentality, the exercise of the power is public.

Sometimes, the test is formulated by asking whether corporation was formed by or under the statute. The true test is not how it is founded in legal personality but when it is created, apart from discharging public functions or doing business as the proxy of the State, whether there is an element of ability in it to effect the relations by virtue of power vested in C it by law. In that case, it was held that the above tests were satisfied and the company was directed to pay full pension.

In Manmohan Singh Jaitla v. Commissioner, Union Tenito1y of Chandigarh & 01~., [1984) Supp. sec 540, it was held that JD educational D institution receiving 95% of the grantin-aid from the Government is "other authority'' under Article 12 of the Constitution. It was, therefore, held that the termination of the service without enquiry was without jurisdiction.

Dismissal from service without enquiry was declared illegal under Article

226. In P.K Ramachandra Iyer & Ors. v. Union of India & Ors., [1984) 2 SCC 141, !CAR, a Society registered under the Societies Registration Act, was held and adjunct of the Government of India. It was financed by the Government of India. Its budget was voted as part of the budget of the Ministry of Agriculture. It was held that it was the State under Article 12 and was amenable to jurisdiction under Article 32 of the Constitution. The Project and Equipment Corporation of India which is a subsidiary owned by State Trading Corporation was held by this Court inA.L. Kalra v. Project and Equipment Corpn. of India Ltd., [1984) 3 SCC 316, to be an agency of

the Government within the meaning of Article 12 of the Constitution of India. In Central Inland Water Transport Corpn. Ltd. & AllT. v. Brojonath Ganguly & Anr., [1986) 3 SCC 156, a Government company incorporated G under Companies Act was held to be an instrumentality or agency. In this case, this Court construed the Fundamental Rights under Articles 14 to 17, the Directive Principles under Articles 38, 41 and 42, the Preamble of the Constitution and held that the River Steam Navigation Co. Ltd. was carrying on the same business as the corporation was doing. A scheme of arrangement was entered into between the corporation and the company.

A They were managed by the Board of Directors appointed and removable by the Central Government. It was, therefore, held that it was an agency or instrumentality of the State under Article 12. In that behalf this Court pointed out that the trade or business activity of the State constitutes public enterprise; the structural forms in which the Government operates in the B field of public enterprise are many and varied. They may consist of governmental department, statutory body, statutory corporation or Government companies etc.; immunities and privileges possessed by bodies so set up by the Government under Article 298 are subject to Fundamental Rights and Directive Principles to further the State policy. For the purpose of Article 12, the Court must see necessarily through corporate veil to C ascertain behind the veil the face of instrumentality or agency of the State.

If the instrumentality or agency of the State has assumed the garb of a governmental company, as defined in Section 3(7) of the Companies Act, it does not follow thereby that it ceases to be an instrumentality or agency of the State. Applying the above test, it was held that Inland Water D Transport Corporation was State.

When its correctness was doubted and its reference to the Constitution Bench was made in Delhi Transpott Corpn. case (supra), while holding that Delhi Road Transport Authority was an instrumentality of the State, it was held that employment is not a bounty from the State nor can its E; survival be at their mercy. Income is the foundation of any Fundamental Rights. Work is the sole source of income. The right to work become as much fundamental as right to life. Law as a social machinery requires to remove the existing imbalances and to further the progress serving the needs of the Socialist Democratic Republic under the rule of law. Prevailing social conditions and actualities of the life are to be taken into account F to adjudge the dispute and to see whether the interpretation would subserve the purpose of the Society.

In Lucknow Development Authority v. M.K Gupta, [1994] 1 SCC 243, the question was whether a Government Authority is amenable to the G regulation of Consumer Protection Act. It was held in paragraph 5 and 6 that a Government or a semi-Government body or local authority are amenable to the Act as much as any other private body rendering similar service. This is a service to the society and they are amenable to public accountability for health and growth of society, housing construction or building activities, by private or statutory body rendering service within the H meaning of Section 2(0) of the said Act. In Star Enterprises & Ors. v.

AIRINDIASTATIITORYCORPN.,. UNIONIABOURUNION(K.RAMASWAMY, J.J 615

C.l.D.C. of Maharashtra Ltd., [1990] 3 SCC 280, it was held that the State A or its instrumentality entering into commercial filed must act in consonance with the rule of law. In paragraph 10, it was held that judicial review of administrative action has bec_ome expensive and its scope is becoming wider day by day. The traditional limitations have been vanishing and the sphere of judicial scrutiny is being expanded. State activity too is becoming fast perversive as the State has descended into the conunercial field and B joint public sector undertaking has grown up. The State action must be justified by judicial review, by opening up of the public law interpretation.

Accordingly, it was held that the action of company registered under the Companies Act was amenable to judicial review. c In LIC of India & Anr. v. Consumer Education & Research Centre & Ors., [1995] 5 SCC 482, it was held that in the contractual field of State action, the State must act justly, fairly and reasonably in the public interest commensurate with the constitutional conscience and socio-economic justice; insurance policies of LIC, terms and conditions prescribed therein involve public element. It was, therefore, held in para 23 at page 498 that D every action of the public authority or the person acting in public interest or any act that gives rise to public element, should be guided by public interest. It is the exercise of the public power or action hedged with public element that becomes open to challenge. If it is shown that the exercise of the power is arbitrary, unjust and unfair, it should be n" answer for the E State, its instrumentality, public authority or person whose acts have the insignia of public element, to say that their actions are in the field of private law and they are free to prescribe any conditions or limitations in their actions. They must be based on some rational and relevant principles. It must not be guided by irrational or irrelevant considerations. Every administrative decision must be hedged by reasons. At page 501 in para 28 it F was held that though the dispute may fall within the domain of contractual obligation, if would not relieve the State etc. of its obligation to comply with the basic requirements of Article 14. To this extent, the obligation is of public character, invariably in every case, irrespective of there being any other right or obligation. An additional contractual obligation cannot divest the claimant of the guarantee under Article 14 of non-arbitrariness at the G hands of the State etc. in any of its actions.

In G.B. Mahajan & Ors. v. Jalgaon Municipal Council & Ors., [1991] 3 sec 91 at 109, para 38, it was held that in interpretation of the test of reasonableness in Administrative Law, the words

11void 11 and "voidable

11 H

A found in private law are amenable to public law situations and "carry over with them meanings that may be in apposite in the changed context. Some such thing has happened to the words 'reasonable' or reasonableness etc." In Shrisht Dhawan (Smt.) v. M/s. Shaw Brothers, [1992] 1 SCC 534 at 553, para 20 the private law principle of fraud and collusion in Section 17 of B the Contract Act was applied to public law remedy and it was held "that

fraud in public law is not the same as fraud in private law. Nor can the ingredient, which has established fraud and commercial transaction be of assistance in determining fraud in administrative law. It has been aptly observed in Khwaja v. Secreta1y of State for the Home Department & Ors., C (1983) 1 ALL. E.R. 765 that it is dangerous to introduce maxims of common law as to the effect of fraud while determining fraud in relation to the statutory law." In Khwaja's case (supra), it was held "despite the wealth of authority on the subject, there is nowhere to be found in the relevant judgments (perhaps because none was thought necessary) a definitive exposition of the reasons why a person who has obtained leave to enter D by fraud is an illegal entrant. To say that the fraud 'vitiates' the leave or that the leave is not 'in accordance with the Act' is, with respect, to state a conclusion without explaining the steps by which it is reached. Since we are here concerned with purely statutory law, I think there are dangers in introducing maxims of the common law as to the effect of fraud on common E law transactions and still greater dangers in seeking to apply the concepts of 'void' and 'voidable'. In a number of recent cases in your Lordships' House, it has been pointed out that these transplants from the field of contract do not readily take root in the field of public law. This is well illustrated in the judgment of the Court of Appeal in the instant case of F Khwaja (1982) 1 WLR 625 at 630; of (1982) 2 ALL ER 523, .at 527, where Donaldson LJ spoke of the appellant's leave to enter as being 'voidable ab initio', which I fmd, with respect, an impossible difficult legal category to

comprehend". Thus, the limitations in private law were lifted and public law interpretation of fraud was enlarged.

G In must be remembered that the Constitution adopted mixed economy and control over the industry in its establishment, working and production of goods and services. After recent liberalised free economy private and multi-national entrepreneurship has gained ascendancy and entrenched into wider commercial production and services, domestic con- H sumption goods and large scale industrial productions. Even some of the public

' -

AIRINDJASTATIITORYCORPN.>. UNIONJ.A1!0URUNION(K.RAMASWAMY, J.) 617

Corporations are thrown open to the private national and multi-national A investments. It is axiomatic, whether or not industry is controlled by Government or public Corporations by statutory form or administrative clutch or private agents, juristic persons, Corporation whole or Corporation sole, their constitution, control and working would also be subject to the same constitutional limitations in tlie trinity, viz., Preamble, the Fundamental Rights and the Directive Principles. They throw open an element of the public interest in its working. They share the burden and shoulder constitutional obligations to provide facilities and opportunities enjoined in the Directive Principles, the Preamble and the fundamental rights enshrined in the Constitution. The word 'control', therefore, requires to be interpreted in the changing commercial scenario broadly in keeping with the aforesaid constitutional goals and perspectives.

From the above discussion, the following principles would emerge :

(1) The constitution of the Corporation or instrumentality or agency or Corporatirn aggregate or Corporation sole is not of sole material relevant to decide whether it is by or under the control of the appropriate Government under the Act.

(2) If it is a statutory Corporation, it is an instrumentality or agency of the State. If it is a company owned wholly or partially by a share capital, floated from public exchequer, it gives indicia that it is controlled by or under the authority of the appropriate Government.

(3) In commercial activities carried on by a Corporation established by or under control of the appropriate Government having protection under Articles 14 and 19(2), it is an instrumentality or agency of the State.

(4) The State is a service Corporation. It acts through its instrumentalities, agencies or persons - natural or juridical.

(5) The governing power, wherever located, must be subject to the fundamental constitutional limitations and abide by the principles laid in the Directive Principles.

(6) The framework of service regulations made in the appropriate rules or regulations should be consistent with and subject to

the same public law principles and limitations.

(7) Though the instrumentality, agency or person conducts commercial activities according to business principles and are separately accountable under their appropriate bye-laws or Memorandum of Association, they become the arm of the

Government.

(8) The existence of deep pervasive State control depends upon the facts and circumstances in a given situation and in the altered situation it is not the sole criterion to decide whether the agency or instrumentality or persons is by or under the control of the appropriate Government.

(9) Functions of an instrumentality, agency or person are of public importance following public interest element.

(10) The instrumentality, agency or person must have an element of authority or ability to effect the relations with its employees or public by virtue of power vested in it by.law, memorandum of association or bye-laws or articles of association.

(11) The instrumentality, agency or person renders an element of public service and is accountable to health and strength of the workers, men and women, adequate means of livelihood, the security for payment of living wages, reasonable conditions of work, decent standard of life and opportunity to enjoy full leisure and social and cultural activities to the workmen.

(12) Every action of the public authority, agency or instrumentality or the person acting in public interest or any act that gives rise to public element should be guided by public interest in exercise of public power or action hedged with public element and is open to challenge. It must meet the test of reasonableness, fairness and justness.

(13) If the exercise of the power is arbitrary, unjust and unfair, the public authority, instrumentality, agency or the person acting in public interest, though in the field of private law, is not free to prescribe any unconstitutional conditions or limitations in their actions.

AIR INDIA Sf ATIITOR Y CORPN. ' UNION LABOUR UNION (K.RAMASWAMY. J.) 619

__.

It must be based on some rational and relevant principles. It must A not be guided by irrational or irrelevant considerations and all their actions would satisfy the basic law requirement' of Article 14. The public law interpretation is the basic tool of interpretation in that behalf relegating common law principles to purely private law field.

From this perspective and on deeper consideration, we are of the considered view that the two-Judge Bench is Heavy E11gi11eeri11g case narrowly interpreted the words "appropriate Government" on the common law principles which no longer bear any relevance when it is tested on the anvil of Article 14. It is true that in Hindustan Machi11e Tool's R.D. Shetty's and Food Corporatiol! of India cases the ratio of Heavy Ellginee>illg case formed

c the foundation. In Hindustan machi11e Tool's case, there was no independent consideration except repetition and approval of the ratio in Heavy E11ginee1i11g case. It is to reiterate that Heavy Engineering case is based on

conce5'ion. In R.B. Shetty's case, the need to dwelve in-depth into this aspect did not arise but reference was made to the premise of private law D interpretation which was relegated to and had given place to constitutional perspectives of Artie!~ 14 which is consistent with the view we have stated above. In Food Corportion of India's case, the Bench proceeded primarily on the premise that warehouses of the Corporation are situated within the jurisdiction of different State Governments which led it to conclude that the appropriate Government would be the State Government.

In the light of the above principles and discussions, we have no hesitation to hold that the appropriate Government is the Central Government from the inception of the Act. The notification published under Section 10 on December 9, 1976, therefore, was in exercise of its power as F appropriate Government. So it is valid in law. The learned Solicitor General is not right in contending that the relevant factors for abolition of the contract labour system in the establishment of the appellant was not before the Central Advisory Board before its recommendation to abolish the contract labour system in the establishment of the appellant. The G learned Attorney General has placed before us the minutes of the Board which do show the unmistakable material furnished do indicate that the work in all the establishments including those of the appellants, is of perennial nature satisfying all the tests engrafted in Section 10(2) of the Act. Accordingly, on finding the work to be of perennial nature, it had recommended and the Central Government had considered and accepted H

A the recommendation to abolish the contract labour system in the aforesaid services. Having abolished it, the Central Government was denuded of its power under Section 10(1) to again appoint insofar as the above services of the Mobile Committee to go once over into the self-same question and the recommendations of the latter not to abolish the contract labour system

B in the above services and the acceptance thereof by the Central Government are without any legal base and, therefore, non est.

The next crucial question for consideration is : whether the High Court was right in directing enforcement of the notification dated December 9, 1976 issued by the Central Government? Before adverting to that C aspect, it is necessary to consider the relevant provisions of the Act.

The constitutionality of the Act was challenged in Mis. Gammon India Ltd. & Ors. v. Union of India & Ors., [1974] 1 SCC 596 on the touchstone of the Fundamental Rights given by Articles 14, 15, 19(1)(g) D and of Article 265. The Constitution Bench elaborately considered the provisions of the Act and had held that the Act in Section 10 empowers the Government to prohibit employment of contract labour. The Government, under that Section, has to apply its mind to various factors, before publishing the notification in the official Gazette prohibiting employment of contract labour in any process, operation or other work in any estab- E lishment. The words "other work in any establishment" were held to be important. The work in the establishment will be apparent from Section 10(2) of the Act as incidental or necessary to the industry, trade, business, manufacture or occupation that is carried on in the e; tablishment. The Government before notifying prohibition of contract labour work which is F carried on in the establishment, will consider whether the work is of a perennial nature in that establishment or work is done ordinarily through regular workmen in that establishment. The words "work of an establishment" which are used in defining workmen as contract labour being employed in or connected with the work of an establishment indicate that the work of the establishment there is the same as work in the estab- G lishmer.t contemplated by Section 10 of the Act. The contractor undertakes to produce a given result for the establishment through contract labour.

He supplies contract labour for any work of the establishment. The entire site is the establishment and belongs to the principal employer who has a right of supervision and control; he is the owner of the premises and the H end product and from whom the contract labour receives its payment either

AIR INDIASTATlITORY CORPN. ' UNION LABOUR UNION [KRAMASWAMY.J.J 621

directly or through a contractor. It is the place where the establishment A intends to carry on its business, trade, industry, manufacture, occupation after the construction is complete. Accordingly, the constitutionality of the Act was upheld.

The appalling conditions of contract labour who are victims of exploitation have been engaging the attention of various committees for a long time and in furtherance of the recommendations, the Act was enacted to benefit, as a welfare measure, the contract labour. Various welfare measures, viz., provisions for canteens, rest rooms, facilities for supply of drinking water, latrines, urinals, first aid facilities and amenities for the dignity of human labour, are in larger interests of the community. Legislature is the best Judge to determine what is needed as the appropriate conditions for employment of comract labour. The legislature is guided by

the needs of the general public in determining the reasonableness of such requirements under the Act and the rules made thereunder. Suffice it would, for the purpose of this case, to concentrate on the definition of D "contract labour" under Section 2{b), "contractor" under Section 2(c). "establishment" under Section 2(e), "principal employer" under Section 2(g), "wages" under Section 2{h) and of "workman" under Section 2{i), Under Section 2( c), ''contractor", in relation to an establishment, means a person who undertakes to produce a given result for the establishment, other than a supply of goods or articles of manufacture to such establishment, through contract labour or who supplies contract labour for any work of the establishment and includes a sub-contractor. "Establishment", under Section 2{ e ), means any office or department of the Government or

a local authority, or any place where any industry, trade, business, manufac- F ture or occupation is carried on. "Principal employer", under Section 2(g), means, in relation to any office or department of the Government or a local authority, the head of that office or department of such other officer as the Government or local authority, as the case may be, may specify in this behalf; and in a factory, it means the owner or occupier of the factory and where a person has been named as the manager of the factory under the Factories Act, 1948, the person so named; in a mine, it means the owner G or agent of the mine and where a person has been named as manager of the mine, the person so named; and in any other establishment, any person responsible for the supervision and control of the establishment, is the principal employer.

11Workman 11, under Section 2(i), means any person employed in or in connection with the work of any establishment to do any H

A skilled, semi-skilled or unskilled, manual, supervisory, technical or clerical work for hire or reward, whether the terms of employment be express or implied, but does not include any such person categorised in clauses (a) to ( e) which are not relevant for the purpose of this case.

B Every principal employer of an establishment under the Act is enjoined under Section 7 to apply for registration and have it registered thereunder. The registration is subject lo the revocation under Section 8 on fulfilment of certain conditions enumerated therein. The effect of non-registration is enumerated in Section 9 in the mandatory language that no principal employer shall employ contract labour in th.e establishment C after the specified period. Section 12 enjoins similar obligation on the contractor for registrations with mandatory language, that from the appropriate date, no contractor to whom e Act applies, shall undertake or execute any work through contract labour except under and in accordance with the licence issued in that behalf by the licencing officers. Licence is D granted under Section 13 and revocation, suspension and amendment thereof have been provided in Section 14 with which we are not concerned in this case. The welfare measures mandated in Chapter V be complied with by every establishment. Under Section 21, every principal employer shall nominate his representative to be present at the time of disbursement of wages by the contractor and the contractor should be responsible for E payment of wages to every such workman. Representative of the principal employer should ensure and certify that wages was paid in the prescribed manner. In case of default committed by the contractor in paying wages within the prescribed period or for short payment, the principal employer should ensure payment of wages in full or the unpaid balance due, as the

F case may be, to the contract labour employed by the contractor in his establishment. He is empowered to recover the amount so paid from the contractor either by deduction from any amount payable to the contractor under any contract or as a debt payable by the contractor.

Section 10 prohibits employment of contact labour with a 11011 G obstante clause. The appropriate Government, after consultation with the Central Advisory Board or, as the case may be, State Board, prohibit, by notification published in the official Gazette, employment of contract labour in any process, operation or other work in any establishment. Before issue of any such notification, the appropriate Government is enjoined to H have regard to the conditions of work and benefits provided for the

AIR INDIASTATIJTORYCORPN. '- UNION lABOUR UNION IKRAMASWAMY, J.] 623

contract labour in the establishment and other relevant factors, such as - A

(a) whether the process, operation or other work is incidental to, or necessary for the industry, trade, business, manufacture or occupation that is carried on in the establishment; (b) whether it is of perennial nature, that is to say, is of sufficient duration having regard to the nature of industry, trade, business, manufacture or occupation carried on in that B establishment; (c) whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto; and ( d) whether it is sufficient to employ considerable number of whole-time workmen.

Section 20 makes it mandatory to provide the amenities of welfare and health facilities enjoined in sections 16 to 19. The expenses incurred in that behalf may be recovered, by the principal employer, from the contractor. C The penalty for non-compliance is provided in Sections 23 and 24 of the Act. Offences by companies are dealt with under Section 25. For the prosecution of non-cognisable offences, complaint is to be laid with previous s, anction of the Inspector in writing. Section 27 prescribes limitation for laying prosecution.

Rules have been prescribed in that behalf for effective enforcement of the Act. Forms and terms and conditions of licence have been prescribed in Rules 21 to 25. Chapter V of the Central Rules deals with welfare and health of the contract labour. Chapter VI deals with payment of wages to the workmen and the manner of payment has also been provided therein. Form III referred to in Rule 18(3) envisages, among others, name and address of the principal employer, type of business etc., total No. of workmen directly employed, name and address of the contractor, nature of work in which contract labour is to be employed on any day, maximum number of contract labour to be employed on any date, probable duration of employment of contract labour etc. The licence issued in Form IV under Rule 21(1) indicates the particulars envisaged in Form III. Form XIII under Rule 75 requires information as to the list of workmen employed by the contractor and also to be specified, the name and surname

of the workmen, SI. No., age and sex, father's/husband's name, nature of G employment, designation, permanent home address of the workman, date of commencement of employment, signature/thumb impression of workmen, date of termination of employment, reasons for termination.

Certificate of completion of the work has been provided in Form XV as per Rule 77. Form XVII,,., per Rule 78(1)(a}(i) is Register of Wages and provides the particulars, apart from other details, number of days worked, H

A units of work done, daily-rate of wages/piece rate etc. Register of Wagescum-Muster Roll is prescribed in Form XVIII referred to in Rule 78(1)(a)(i) and requires details in particular as to daily attendance, units worked, designation/nature of work, total attendance, units of work done, overtime \vages etc.

B It would thus be seen that before the Central or State Advisory Board advises the appropriate Government under Section 10(1) on the issue whether or not to abolish the contract labour system, it has before it all the relevant factual material and the appropriate Government after the receipt and consideration of the recommendations and the material and takes C decision.

The pivotal question for consideration is : on abolition of the contract labour by publication of a notification in the Gazette under sub-section (1) of Section 10, what would be the consequences? It is seen that so long as the contract labour system continues, the principal employer is enjoined to D ensure payment of wages to the contract labour and to provide all other amenities envisaged under the Act and the Rules including provisions for food, potable water, health and safety and failure thereof visits with penal consequences. {

The 42nd Constitution (Amendment) Act, 1976, brought explicitly in the Preamble socialist and secular concepts in sovereign democratic of Bharat with effect from January 3, 1977. The Preamble was held as part of the Constitution in His Holiness Kesavananda Bharati Sripadagalavarn v.

State of Kera/a, (1973] Supp. SCR 1. The provisions of the Constitution including Fundamental Rights are alterable b11t the result thereof should be consistent with the basic foundation and the basic structure of the Constitution. Republican and democratic form of Government, secular chacacter of the Constitution, separation of powers, dignity and freedom to the individual are basic features and foundations easily discernible, not only from the Preamble but the whole scheme of the Constitution. In S.R.

G Bommai v. Union of India, (1994] 3 SCC 1, it was held that Preamble of the Constitution is the basic feature. Either prior to 42nd Constitution (Amendment) Act, or thereafter, though the word "socialist" was not expressly brought out separately in the main parts of the Constitution, i.e., in the Chapters on Fundamental Rights or the Directive Principles, its seed-beds are right to participation in public offices, right to seek con- H sideration for appointment to an office or post; right to life and right to

AIR INDIA STATIITORY CORPN. ' UNION LABOUR UNION fK.RAMASWAMY.J.J 625

equality which would amplify the roots of socialism in democratic form of A Government; right to equality of statu' and of opportunity, right to equal access to public places and right to prohibition of discrimination read with right to freedom, protective discrimination, abolition of untouchability, its practices in any form a constitutional offence, as guaranteed in Part III & IV, i.e., Fundamental Rights and Directive Principles which to every citizen are Fundamental Rights. In Mine1va Mills Ltd. & Ors. v. Union of India & Ors., [1981] 1 SCR 206 = AIR (1980) SC 1789, the Constitution Bench had held that the Fundamental Rights and the Directive Principles are two wheels of the chariot in establishing the egalitarian social order. Right to life enshrined in Article 21 means something more than survival of animal existence. It would include the right to live with human dignity vide Francis Coralie Mullin v. The Administrator, Union Tenito1y of Ddhi & Ors., AIR

(1981) SC 746 para 3; Olga Tellis v. Bombay Municipal Corporation, AIR

(1986) SC 180; Delhi Transpo1t Corporation v. D. T.C. Mazdoor Congress, AIR (1991) SC 101para223, 234 and 259 = [1991] Supp. 1SCC600. Right

to sustenance allowance during suspension was held in state of Maharashtra

v. Chandrabhan, AIR (1983) SC 803 para 20 to be a part of right to life. D Right to means of livelihood and the right to dignity, to health, right to potable water, right to pollution free environment and right to education have been held to be part of right to life. Social justice has been held to be fundamental right in Consumer Education and Research Centre v. Union of India, [1995] 3 SCC 42 = (1995) 1 SCALE 354 at 375. The Directive E Principles in our Constitution are fore-runners of the U.N.O. Convention on Right to Development as inalienable human right and every person and all people are entitled to participate in, contribute to and enjoy economic, social cultural and political development in which all human rights, fundamental freedoms would be fully realised. It is the responsibility of the State as well as the individuals, singly and collectively, for the development F taking into account the need for fuller responsibility for the human rights, fundamental freedoms as well as the duties to the community which alone can ensure free complete fulfilment of the human being. They promote and protect an appropriate social economic order in democracy for development. The State should provide facilities and opportunities to ensure development and to eliminate all obstacles to development by appropriate G economic and social reforms so as to eradicate all social injustice. These principles are imbibed, as stated earlier, an integral part of our Constitution in the Directive Principles. Therefore, the Directive Principles now stand elevated to inalienable fundamental human rights. Even they are justiciable by themselves. Social and economic democracy is the foundation H

A for stable political democracy. To make them a way of life in the Indian polity, law as a social engineer, has to create just social order, remove the inequalities in social and economic life and socio-economic disabilities due to which people are languishing; and to require positive opportunities and facilities as individuals and groups of persons for development of human personality in our civiliscd, idemocratic set up so that every individual would B strive constantly to rise to higher levels. Dr. Ambedkar, in his closing speech in Constituent Assembly on November 25, 1949, had lucidly s/ucidated the meaning of social and political democracy. He stated that it ineans a way of life which recognises liberty, equality and fraternity as the principles of life. They are not to be treated as separate items in a trinity . . C They are not to be treated as separate items in a trinity. They form an integral union. One cannot divorce one from the other; otherwise it would defeat the very purpose of democracy. Without equality, liberty would produce supremacy of the few over the many; equality without liberty would kill the initiative to improve the individual's excellence, political equality without socio-economic equality would run the risk of democratic D institutions to suffer a set back. Therefore, for establishment of just social order in which social and economic democracy would be a way of life inequalities in income should be removed and every erdeavour be made to eliminate inequalities in status through the rule • .:· :.w.

E The word "socialism" was brought into the Preamble and its sweep elaborately was considered by this Court in several judgments. It was held that the meaning of the word "socialism" in the Preamble of the Constitution was expressly brought in the Constitution to establish an egalitarian social order through rule of law as its basis structure. In Mbwva Mills Ltd.

F case, the Constitution Bench had considered the meaning of the word

"socialism 11 to crystalise a socialistic State securing to its people socioeconomic justice by interplay of the Fundamental Rights and the Directive Principles. In D.S. Nakara & Ors v. Union of India, [1983] 2 SCR 165, another Constitution Bench had held that the democratic socialis.n G achieves socio-economic revolution to end poverty, ignorance, disease and inequality of opportunity. The basic framework of socialism was held to provide a decent standard of life to the working people and especially to provide security from cradle to grave. The less equipped person shall be assured a decent minimum standard of life to prevent exploitation in any H form, equitable distribution of national cake and to push the disadvantage to the upper ladder of life. It was further held that the Preamble directs

AIR INDIASTATIITORY CORPN. ' UNION JABOUR UNION (KRAMASWAMY, J.] 627

the centers of power, the Legislative, Executive and Judiciary, to strive to A shift up from a wholly feudal exploited slave society to a vibrant, throbbing socialist welfare society is a long march; but daring the journey to the fulfilment of goal, every State action, whenever taken, must be directed and must be so interpreted as to take the society towards that goal, Dr.

V.K.R.V. Rao, one of the eminent economists of India in his "Indian B Socialism-retrospect and prospect" has stated that equitable distribution of the income and maximisation of the production is the object of socialism under the Constitution to solve the problems of unemployment, low income and mass poverty and to bring about a significant improvement in the national standard of living. He also stated that to bring about socialism, C deliberate and purposive action on the part of the State, in regard to production as well as distribution and necessary savings, investment, use of human skills and use of science and technology should be brought about.

Changes in property relations, taxation, public expenditure, education and the social services are necessary to make a socialist State under the D Constitution, a reality. It must also bring about, apart from distribution of income, full employment as also increase in the production. In State of Kamataka v. Shri Ranganatha Reddy & Anr., [1978] 1 SCR 641, a Bench of nine judges of this Court, considering the nationalisation of the contract carriages, had held th>.t the aim of socialism is the distribution of the material resources of the community in such a way as to subserve the commonhood. The principle embodied in Article 39(b) of the Constitution E

is one of the essential directives to bring about the distribution of the material resources. It would give full play to the distributive justice. It fulfils the basic purpose of re-structuring the economic order. Article 39(b ), therefore, has a social mission, it embraces the entire material resources of F

the community. Its task is to distribute such resources. Its goal is to undertake distribution as best to subserve the common good. In Sanjeev Coke Manufacturing Co. v. Bharat Cooking Coal Ltd. & Anr., [1983] 1 SCR 1000, another Constitution Bench interpreted the word

11socialism'1 and Article 39(b) of the Constitution and had held that the broad egalitarian G principles of economic justice was implicit in every Directive Principle. The Jaw was designed to promote broader egalitarian social goals to do economic justice for all. The object of nationalisation of mining was to distribute nation's resources. In State of Tamil Nadu Etc. Etc. v. L. Abu Kavur Bai & Ors. Etc., [1984] 1 SCR 725, the same interpretation was given H

A by another Constitution Bench upholding nationalisation of State Carriages and Contract Carriages (Acquisition) Act. Therefore, all State actions should be such to make socio-economic democracy with liberty, equality and fraternity, a reality to all the people through democratic socialism

under the rule of law.

B In Consumer Education & Research Centre & Ors. v. Union of India

& Ors., (1995] 3 SCC 42, a Bench of three Judges (to which one of us, K.

Ramaswamy, J., was a member) had to consider whether right to health of workers in the Asbestos industries is a fundamental right and whether the management was bound to provide the same? In that context, con- C sidering right to life under Article 21, its meaning, scope and content, this Court had held that the jurisprudence of personhood or philosophy of the right to life envisaged under Article 21 enlarges its sweep to encompass human personality in its full blossom with invigorated health which is a wealth to the workman to earn his livelihood, to sustain the dignity of D person and to live a life with dignity and equality. The expression "life"

assured in Article 21, does not connote mere animal existence or continued drudgery through life. It has a much wider meaning which includes right to livelihood, better standard of living, hygienic conditions in the workplace and leisure.

Right to health and medical care to protect health and vigour, while in service or after retirement, was held a fundamental right to a worker under Article 21, read with Articles 39(e), 41, 43, 48-A and all related constitutional provisions and fundamental human rights to make the life of the workman meaningful and purposeful with dignity of person. The right to health of a worker is an integral facet of meaningful right to life, to have not only a meaningful existence but also robust health and vigour without which the worker would lead a life of misery. Lack of health denudes him of his livelihood. Compelling economic necessity to work in an industry exposed to health hazards, due to indigence for bread-winning for himself G and his dependents, should not be at the cost of the health and vigour of the workman.

The Preamble and Article 38 of the Constitution envision social justice as the arch to ensure life to be meaningful and livable with human H dignity. Jurisprudence is the eye of law giving an insight into the environ-

AIR INDIASTATIITORYCORPN." UNION !ABDUR UNION (K.RAMASWAMY, J.) 629

ment of which it is the expression. It relates the Jaw to the spirit of the time A and makes it richer. Law is the ultimate aim of every civilised society, as a key system in a given era, to meet the needs and demands of its time.

Justice, according to law, comprehends social urge and commitment. The Constitution commands justice, liberty, equality and fraternity as supreme values to usher in the egalitarian social, economic and political democracy.

Social justice, equality and dignity of person are cornerstones of social democracy. The concept of "social justice" which the Constitution of India engrafted, consists of diverse principles essential for the orderly growth and development of personality of every citizen. "Social justice" is thus an integral part of justice in the generic sense. Justice is the genus, of which social justice is one of its species, Social justice is a dynamic device to mitigate the sufferings of the poor, weak, dalits, tribals and deprived sections of the society and to elevate them to the level of equality to live a life with dignity of person. Social justice is not a simple or single idea of a society but is an essential part of complex social change to relieve the poor

etc. from handicaps, penury, to ward off distress and to make their life D livable, for greater good of the society at large. In other words, the aim of social justice is to attain substantial degree to social, economic and political equality, which is the legitimate expectation and constitutional goal. Social security, just and humane conditions of work and leisure to workman are part of his meaningful right to life and to achieve self-expression of his personality and to enjoy the life with dignity. The State should provide E facility and opportunities to enable them to reach at least minimum standard of health, economic security and civilised living while sharing according to their capacity, social and cultural heritage.

In a delivered development society like ours, steeped with unbridge- F able and ever-widening gaps of inequality in status and of opportunity, law is a catalyst, rubicon to the poor etc. to reach the ladder of social justice.

What is due cannot be ascertained by an absolute standard which keeps changing, depending upon the time, place and circumstance. The constitutional concern of social justice as an elastic continuous process is to accord G justice to all sections of the society by providing facilities and opportunities to remove handicaps and disabilities with which the poor, the workmen etc. are languishing and to secure dignity of their person. The Constitution, therefore, mandates the State to accord justice to all members of the society in all facets of human activity. The concept of social justice embeds equality to flavour and enliven the practical content of life. Social justice H

A and equality are complementary to each other so that both should maintain their vitality." Rule of law, therefore, Is a potent instrument of social justice to bring about equality in results. It was accordingly held that right to social justice and right to health are Fundamental Rights. The management was directed to provide health insurance during service and at least 15 years

B after retirement and periodical tests for protecting the health of the workmen.

In UC of India & Anr. v. Consumer Education & Research Centre & Ors., [1995] 5 SCC 482, considering the Life Insurance Corporation's right to fix the rates of premium, this Court had held that the authorities or C private persons or industry are bound by the Directives contained in Part

IV and the Fundamental Rights in Part III and the Preamble of the Constitution. The right to carry on trade is subject to the Directives contained in the Constitution, the Universal Declaration of Human Rights, European Convention of Social, Economic and Cultural Rights and foe D Convention on Right to Development for Socio Economic Justice. Social

security is a facet of socio-economic justice to the people and a means to livelihood. In Murlidhar Dayandeo Kesekar v. Vishwanath Pandu Barde & Anr., (1995] supp 2 SCC 549 (to which two of us, K. Ramaswamy, and B.L. Hansaria JJ., were members), the question arose : whether the E alienation of the lands assigned to Scheduled Tribes was valid in law?

In that context considering the Preamble, the Directive Principles and the Fundamental Rights including the right to life, this Court had held that economic empowerment and social justice are Fundamental Rights to the tribes. The basic aim to the welfare State is the attainment of

F substantial degree of social, economic and political equalities and to achieve self-expression in his work as a citizen, leisure and social justice.

The distinguishing characteristic of the welfare State is the assumption by community acting through the State and as its responsibilities to provide the means, whereby all its members can reach minimum standard of economic security, civilised living, capacity to secure social status G and culture to keep good health. The welfare State, therefore, should take positive measure to assist the community at large to act in collective responsibility towards its member and should take positive measure to assist them to achiev~ the above. It was, therefore, held thus :

H "Article 21 of the Constitution assures right to life. To make right

AIR INDIASTATL'TORYCORPN.>. UNION JABOUR UNION [KRAMASWAMY.l.[ 631

to life meaningful and effectiv"1 this Court put up expansive inter- A pretation and brought within itsambit right to education, health, \ speedy trial, equal wages for equal work as fundamental rights.

Articles 14, 15. and 16 prohibit discrimination and accord equality.

The Preamble to the Constitution as a socialist republic visualises to remove economic inequalities and to provide facilities and opportunities for decent standard of living and to protect the economic interest of the weaker segments of the society, in particular, Scheduled Castes i.e. Dalits and the Scheduled Tribes i.e.

Tribes and to protect them from "all forms of exploitations". Many a day have come and gone after 26.1.1950 but no leaf is turned in

the lives of the poor and the gap between the rich and the poor is C gradually widening on the brillk of being unbridgeable.

Providing adequate means of livelihood for all the citizens and distribution nf the material resources of the community for common welfare, enable the poor, the Dalits and the Tribes, to fulfil D the basic needs to bring about a fundamental change in the structure of the. Indian society which was divided by erecting impregnable walls of separation between the people on grounds of caste, sub-caste, creed, religion, race, language and sex. Equality of opportunity and status thereby would become the bedrocks for E social integration. Economic empowerment thereby is the foundation to make equality of status, dignity of person and equal opportunity a truism. The core of the commitment of the Constitution to the social revolution through rule of law lies in.effectuation of the fundamental rights and directive principles as supplementary and complementary to each other. The Preamble, Fundamental Rights and Directive Principles - the trinity - are the conscience of the Constitution. Political democracy has to be stable. Socio- \ economic democracy must take strong roots and should become a

way of life. The State, therefore, is enjoined to provide adequate means of livelihood to the pocrr, weaker sections of the society, the G Dalits and the Tribes and to distribute material resources of the community to them for common welfare etc. 11

It was accordingly held that right to economic empowerment is a fundamental right. The alienation of assigned land without permission of H

A competent authority was held void.

In R. Chandevarappa and Ors. v. State of Kamataka and Ors., (1995] 6 SCC 309 (to which two of us, K. Ramaswamy and B.L. Hansaria, .JJ., were members) this Court was to consider whether the alienation of Government lands allotted to the Scheduled Castes was in violation of the B Constitutional objectives under Articles 39(b) and 46. It was held that economic empowerment to the Dalits, the Tribes and the poor as a part of distributive justice is a Fundamental Right; assignment of the land to them under Article 39(b) was to provide socio-economic justice to the Scheduled Castes. The alienation of the land, therefore, was held to be in C violation of the Constitutional objectives. It was held thus :

"In fact, the cumulative effect of social and economic legislation is to specify the basic structure. Moreover, the social system shapes the wants and aspirations that its citizens come to have. It determines in part the sort of persons they want to be as well as the sort of persons they are. Thus an economic system is not only an institutional device for satisfying existing wants and needs but a way of creating and fashioning wants in the future. The economic empowerment, therefore, to the poor, the dalits and the tribes as an integral constitutional scheme of socio-economic democracy is a way of life of political democracy. Economic empowerment is, therefore, basic human right and a fundamental right as part of right to live, equality and of status and dignity to the poor, the weaker sections, the dalits and the tribes.

The prohibition from alienation is to effectuate the constitutional policy of economic empowerment under Articles 14, 21, 38, 29 and 46 read with the Preamble of the Constitution. Accordingly refusal to permit alienation is to effectuate the constitutional policy. The alienation was declared to be void under Sections 23 of the Contract Act being violative of the constitutional scheme of economic empowerment to. accord equality of status, dignity of persons and economic empowerment.

It was further held that providing adequate means of livelihood for all the citizens and the distribution of the material resources of the community for common welfare, enable the poor, the dalits and the tribes, to H fulfil the basic needs to bring about the fundamental change in the struc-

AIR INDIA Sf A TUTOR Y CORPN. ' UNION LABOUR UNION [K.RAMASWAMY, J.] 633

ture of the, Indian society. Equality of opportunity and status would thereby A become the 'oedr9cks for social integration. Economic empowerment is, therefore, a basic human right and Fundamental Right as a part of right to life to make political democracy stable. Socio-economic democracy must take strong route and becoe away of \ife. The state, therefore, is enj()ined to provide adequate means to livelihood to the poor, the weaker sections B of the society, the dalits and the tribes acl distribute material resources of the community to then1 for common welfare. Justice is an attribute of human conduct and rule of law is indispensable foundation to establish socioeconomic justice. The doctrine of political economy must include .interpretation for the public good which is based on justice that would guide the people when questions of economic and social policy are under C consideration. In Peerless Ge11eral Fina11ce a11d Investme11t Co. Ltd. & A11r.

v. Reserve Ba11k of India, [ 1992] 2 SCC 343 at 389 para 55, this Court had held that stability of the political democracy hinges upon socio-economic democracy. Right to development is one of the important facets of basic human rights. Right to self-interest is inherent in right to life. Mahatma D Gandhiji, the Father of Nation said that "every human being has a right to live and, therefore, to find the wherewithal to feed himself and where necessary to cloth and house himself'. In D.K. Yadav v. !.MA. I11dustries Ltd, [1993] 3 sec 259, the question was whether the workman for absence in service for 7 days can be removed without an enquiry. In that context a bench of three judges had held thus : E

"Article 21 clubs life with liberty, dignity of person with means of livelihood without which the glorious contents of dignity of person would he reduced to animal eXistence. When right to life interpreted in the light of the colour and content of procedure estah- F lished by law must be in conformity with the minimum fairness and processual justice, it would relieve legislative callousness despiring opportunity of being heard and fair opportunities of defence.

Article 14 has a pervasive processual potency and versatile quality, equalitarian in its soul and allergic to discriminatory dictates.

Equality is the antithesis of arbitrariness".

In Dalmia Cement (Bharat) Ltd. & Anr. v. Union of India & 01'. Etc., JT (1996) 4 SC 555, a Bench of three Judges (to which one of us, K.

Ramaswamy, .I., was a member) was to consider the constitutionality of Jute Packing Material Act, 1987. The law was made to protect the agricul- H

A . turists cultivating jute and jute products. In that context it was held thus :

"the agriculturists have fundamental rights to social justice and economic empowerment. The Preamble of the Constitution is the epitome of the basic structure built in the Constitution guaranteeing justice - social, economic and political - equality of status and of opportunity with dignity of person and fraternity. To establish an egalitarian social order, the trinity, the Preamble, the Fundamental Rights in Part III and Directive Principles of State Policy

(for short, 'Directives') in Chapter IV of the Constitution delineated the socio-economic justice. The. word justice envision in the Preamble is used in broad spectrum to harmonise individualright with the general welfare of the society. The Constitution is the supreme law. The purpose of law is realisation of justice wose content and scope vary depending upon the prevailing social environment. Every social and economic chahge causes change in the law. In a democracy governed by rule of law, it is not possible to change the legal basis of socio-economic life of the community without bringing about corresponding change in lhe law. In interpretation of the Constitution and the law, endeavour needs to be made to harmonise the individual interest with the paramount interests of the community keeping pace with the realities of ever changing social and economic life of the community envisaged in the Constitution. Justice in the Preamble implies equality consistent with the competing demands between distributive justice with those of cumulative justice. Justice aims to promote the general well-being of the community as well as individual's excellence. The principal end of society is to protect the enjoyment of the rights of the individuals subject to social order, well-being and morality.

Establishment of priorities of liberties is a political judgment.

Law is the foundation on which the potential of the society stands. Law is an instrument for social change as also defender for social change.

Social justice is the comprehensive form to remove social imbalances by law harmonising the rival claims or the interests of different groups and/or sections in the social structure or individuals by means of which alone it would be possible to build up

AIRIND!ASfATlJIDRYCORPN.'- UNIONIABOURUNION[KRAMASWAMY, J.} 635

a welfare State. The idea of economic justice is to make equality A of status meaningful and the life worth living at its best removing inequality of opportunity and of status - social, economic and political.

Law is the ultimate aim of every civilised society, as a key system B in a given era, to meet the needs and demands of its time. Justice, according to law, comprehends social urge and commitment. Justice, liberty, equality and fraternity are supreme consfitutional values to establish the egalitarian social, economic and political democracy. Social justice, equality and dignity of person are cornerstones of social democracy .. Social justice consists of diverse C principles essential for the orderly growth and development of personality of every citizen. Justice is the generic sense and social justice is its facet, a dynamic devite to mitigate the sufferings of the disadvantaged and to eliminate handicaps so as to elevate them to the level of equality to live life with dignity of person. Social D justice is not a simple or single idea of a society but it an essential part of complex social change to relieve the poor etc. from handicaps, penury, to ward them off from distress and to make . their lives livable for greater good of the society at large. Social justice, therefore, gives substantial degree of social, economic and political E equality, which is the C:onstitutional right of every citizen. In para 19, it was further elaborated that social justice is one of the disciplines of justice which relates to the society. What is due cannot be ascertained by absolute standard which keeps changing depending upon the. time, place and circumstances. The constitutional concern of social _jllstice, as an 'elastic continuous process, is to transform and accord justice to sections of the society by providing facilities and opportunities to remove . handicaps and disabilities with the poor etc. are languishing. It aims to secure dignity of their persons. It is the duty of the State to accord justice

to all members of the society in all facets of human activity. The G concept of social justice embeds equality to flavour and enlivens practical content of life. Social justice and equality are complementary to each other so that both should maintain their vitality. Rule of law, therefore, is a potent instrument of social justice to bring about equality in result.

SUPREMF COURT REPORTS [1996] SUPP. 9 S.C.R.

Social and economic justice in the context of our Indian Constitution must, therefore, be understood in a comprehensive sense to remove every inequality and to provide equal opportunity to all citizens in social as well as economic activities and in every part of life. Economic justice means the abolition of those economic conditions which ultimately result in the inequality of economic values between men. It means to establish a democratic way of life built upon socio-economic structure of the society to make the rule of law dynamic.

The Fundamental Rights and the Directive are, therefore, harmoniously be interpreted to make the law social engineer to provide flesh blood to the dry bones of law. The Directive would serve the Court as a beacon light to interpretation. Fundamental Rights are rightful means to the end, viz., social and etonomic justice provided in the Directives and Preamble. The Fundamental Rights and the Directives establish the trinity of equality, liberty and fraternity in an egalitarian social order and prevent exploitation.

Social Justice, therefore, forms the basis of progressive stability in the society and human progress. Economic justice means abolishing such economic conditions whicil remove the inequality of economic value between man and man, concentration of wealth and means of production in the hands of a few and are detrimental to the vast Law, therefore, must seek to serve as a flexible instrument of socio-economic adjustment to bring about peaceful socioeconomic revolution under rule of law. The Constitution, the fundamental supreme lex distributes the sovereign power between the Executive, the Legislature and the Judiciary. The Court, therefore, must strive to give harmonious interpretation to propel forward march and progress towards establishing an egalitarian social order. 11

The validity of the Act was accordingly upheld.

It is already seen that in D.T.C's case (supra), this Court had held that right to life to a workman would include right to continue in permanent employment which is not a bounty of tb:e employer nor can its survival be at the volition and mercy of the employer. Income is the H foundation to enjoy many Fundamental Rights and when work is the source

AIRINDIASfATlITORYCORPN.>. UNION !ABOUR UNION (KRAMASWAMY, J.( 637

of income, the right to work would become as such a fundamental right. A Fundamental Rights can ill-afford to be consigned to the limbo of undefined premises and uncertain application. In Bandhu Mukti Morcha v.

U11io11 of India, [1984] 3 SCC 161, this Court had held that right to life with human dignity enshrined in Article 21 derives its life breath from the Directive Principles of State Policy and that opportunities and facilities should be provided to the people. In Olga Tellis's case, this Court had held B

that the right to livelihood is an important facet of the right to life.

Deprivation of the means of livelihood would denude the life itself. In C.E.S.C. Ltd. & Ors. v. S.C. Bose & 01'., [1992] 1SCC441, it was held that the right to social and economic justice is a fundamental right. Right to health of a worker is a fundamental right. The right to live with human dignity at least with minimum sustenance and shelter and all those rights c

and aspects of life which go to make a man's life complete and worth living, would form part of the right to life. Enjoyment of life and its attainment - social, cultural and intellectual - without life cannot be meaningful, would embrace the protection and preservation of life guaranteed by Article 21. D In Life /11surance Corporation case, a Bench of two Judges had held that right to economic equality is a fundamental right. In Dalmia Cement Bharat Ltd. case, right to economic justice was held to be a fundamental right. • Right to Shelter was held to be a fundamental right in Olga Tellis's case; P.G. Gupta v. State of Gujarat & Ors., [1995] Supp. 2 SCC 182; Mis.

Shantisar Builders v. Narayan Khim/a/ Totame & Ors., [1990] 1 SCC 520; E Chameli Singh & Ors. v. State of U.P. & Anr., [1996] 2 SCC 549 etc.

It would, thus, be seen that all essential facilities and opportunities to the poor people are fundamental means to development, to live with minimum comforts, food, shelter, clothing and health. Due to economic F constraints, though right to work was not declared as a fundamental right, right to work of workman, lower class, middle class and poor people is means to development and source to earn livelihood. Though, right to employment cannot, as a right, be claimed but after the appointment to a post or an office, be it under the State, its agency instrumentality, juristic G person or private enterpreneur it is required to be dealt with as per public element and to act in public interest assuring equality, which is a genus of Article 14 and all other concomitant rights emanating therefrom are species to make their right to life and dignity of person real and meaningful. The democracy offers to everyone as a doer, an exerter and developer and enjoyer of his human capacities, rather than merely as a consumer of H

A utilities, as stated by Justice K.K. Mathew, in his "The Right to Equality and Property under the Indian Constitution" at page 47-48. These exercises of human capacity require assess to the material resources and also continuous and sufficient intake of material means to maintain

human energy. Lack of access to the material resources is an impediment to the development of human personality. This impediment, as a lack of access to means of labour, if we take labour in its broadest sense of human resource, requires removal only under the rule of law. To the workmen, right to employment is the property, source of livelihood and dignity of person and a means to enjoy life, health and leisure. Equality, as a principle of justice, governs the distribution of material resources C including right to employment. Private property ownership has always required special justifications and qualifications to reconcile the institution with the public interest. It requires to thrive and, at the same time, be responsive to social weal and welfare. St. Thomas Acquinas, in his "Selected Political Writings" (1948 Edn.) at page 169, has stated that the D private rights and public needs are to be balanced to meet the public interest "the common possession of things is to be attributed to natural law, not in the sense that natural law decrees that all things are to be held in common and that there is to be no private possession, but in the sense that there is no distinction of property on the grounds of natural E law, but only by human agreement, and this pertains to positive law, as we have already shown. Thus, private property is not opposed to natural law, but is an addition to it, devised by human reason. If, however, there is such urgent and evident necessity that there is clearly an immediate need of necessary sustenance, if, for example, a person is in immediate

F danger of physical privation, and there is no other way of satisfying his need, then he may take what is necessary from another person's goods, either openly or by stealth. Nor is this strictly speaking fraud or robbery." Property is a social institution based upon an economic need in a society organised through division of labour, as propounded by Dean Rosco Pound in his "An Introduction to Philosophy of law" (1954 Edn.) G page 125, at 129. M.R. Cohen in his "Property and Sovereignty" (13 Cornell} Law Quarterly page 8 at 12 had stated that "the principle of freedom of personality certainly cannot justify a legal order wherein a few can, by virtue of their legal monopoly over necessities, compel others io work under degrading and brutalizing condition." If there is H no property or if one does not derive fruits and means of one's labour,

AIR INilIA STA TIITOR Y CORPN. ' UNION !ABDUR UNION [KRAMASWAMY. I] 639

no one would have any incentive to labour in the broader sense. Social A progress receives set back without equality of status, fraternity would not be maximised. Edward Kent in his "Property, Power and Authority", Prof.

Herald Laski in his "Congress Socialist" dated April 11, 1936, had stated that "those who know the normal life of the poor will realise enough that without economic security, liberty is not worth living". Brooklyn Law Review page 541 at 5~7 has stated that "In modern translation, public officers and others who promulgate policies to increase unemployment or to deny or dilninish benefits to the poor are accountable for the consequences to free human personality." It would, thus, be clear that in a socialist democracy governed by the rule of law, private property, right of the citizen for development and his right to employment and his entitlement for employment to the labour, would all harmoncously be blended to serve larger social interest and public purpose.

Mahatma Gandhiji, the Father of the Nation, in his book "Socialism of My Concept", has said thus :

"To a people famishing and idle, the only acceptable form in which God can dare appear is work and promise of food as, wages. God created man to work for his food, and said that those who ate without work were thieves. Eighty per cent of India are compulsory thieves half the year. Is it any wonder if India ha' become one vast prison? 11

Again, he stressed :

No one has ever suggested that grinding pauperism can lead to anything else than moral degradation. Every human being has a F right to live and, therefore, to find the wherewithal to feed himself and, where necessary, to clothe and house himself... In a well ordered society the securing of one's livelihood should be, and is found to be the easiest thing in the world. Indeed, the test to orderliness in a country is not the number of millionaires it owns, but the absence of starvation among its masses.

G ••• • •• • ••

Working for economic equality means abolishing the eternal conflict between capital and labour. It means the levelling down of the few rich in whose hands is concentrated the bulk of the nation's H

wealth on the one hand, and the levelling up of the semi-started, naked millions on the other. A non-violent system of Government is clearly an impossibility so long as the wide gulf between the rich and the hungry millions persists. The contrast between the palaces of New Delhi and the miserable hovels of the poor labouring class nearby, cannot last one day in a free India in which the poor will enjoy the same power as the richest in the land. A violent and bloody revolution is a certainty one day, unless there is voluntary abdication or riches and the power that riches give a sharing them for the common good."

Pandit Jawahar Lal Nehru, the architect of social and economic planned democracy, in his "Independence and After That" (Collection of Speeches 1946-49) Publication Division, Government of India 1949 Edn. at page 28, had stated that social equality in the widest sense and equality of opportunity for every one, every man and woman must have the opportunity to development to the best of his or her ability. However, merit must D come from ability and hard work and not because of cast or birth or riches.

Social equality would develop the sense of fraternity among the members of a social groups where each would consider the other as his equal, not higher or lower. A society, which does not treat each of its members as equals, forfeits its right of being called a democracy. All are equal partners E in the freedom. Every one of our ninety four hundred million people must have equal right to opportunities and blessings that freedom of India has to offer. To bring freedom in a comprehensive sense to the common man, material resources and opportunity for appointment be made available to secure socio-economic empowerment which would ensure justice and fullness of life to workmen, i.e., every man and woman. In "Beyond Justice" by Agnes Heller at page 180, on the distribution of material, she has stated about on distributive justice thus :

"The distribution of material goods has always been of concern in images and theories of .iustice, but, even when the issue was given the highest importance, it was subjected to and understood within a general theory of justice, and addressed \\ithin the framework of a complete socio-political concept of justice. As we have seen, in the prophetic concept of justice the misery of the poor called for divine retribution, since alleviating misery was believed to be a matter not of optional charity but of moral duty. To neglect this

AIRIND!A'TATIJTORYCORPN.,. UNIONIABOURUNION(K.RAMASWAMY, J.( 641

duty was to sin, to breach the divine laws. Plato proposed the A abolition of private property for the caste of guardians in order to make the Republic as a whole just. Aristotle, who coined the term 'distributive justice', recommended as relative equality of wealth - neither too much nor too little, but 'medium wealth' - as a condition of good life of the good citizen and the good city. Even Rousseau, the most egalitarian philosopher in respect of distribution, subjected the solution of this problem to :he general patterns of an socio-political concept of justice.

Locke did not completely break with this longstanding tradition either. As we have seen, he contributed to the emergence of the C concept 'retributive justice' rather than 'distributive justice. However, he had already presented a sophisticated theory legitimizing inequality in property ownership, a theory deriving property from work. I have mentioned that Locke did not support the idea 'to each according to his entitlement' for he put 'entitlement' into the D 'to each' catego.ry, whereas the 'according to' category was defined by 'work' (mixing work and nature}. But Locke never claimed that entitlement was the main issue, let alone the only issue of justice.

Hume is undoubtedly the founding father of that branch of sociopolitical justice now called 'distributive'. He even claimed that E property and property alone is the subject matter of justice. He asserted too that retribution (negative sanctions} in the suspension of justice for the sake of social utility : 'When any man, vein in political society, renders himself by his crimes, obnoxious to the public, he is punished by the laws in his goods and persons; that F is, the ordinary rules of justice are, with regard to him, suspended for a moment..,,,,

Humane also deduced justice from 'public utility'. Inequality in property ownership is just because it is useful. We can imagine two G cases - and extreme cases - where property (inequality in property ownership) qua justice loses its social usefulness; the situation of absolute abundance and the situation of absolute scarcity. In the former, property is useless, redundant because, if all needs can be satisfied, we are beyond justice. In the latter situation property rules are violable, thus justice must be suspended. Yet we live in H

a situation of limited abundance (or limited scarcity). This is why property qua justice is useful. Thus in Humane the concept 'justice' reduces to the idea 'to each according to his property entitlement'; all other uses of the notion 'justice' are seen as relating to the 'suspension on justice' (although the term 'equity' can remain relevant in these other contexts).

Humane, an extremely sincere man, did not shirk from facing proposals alien to his own. He stated, nature is so liberal to mankind, that, were all her presents equally divided among the species, and improved by art and industry, every individual would enjoy all the necessaries, and even most of the comforts of life .....

It must also be confessed, that, wherever we depart from this equality, we rob the poor of more satisfaction than we add to the rich .....

Justice K.K. Mathew in his "Democracy Equality and Freedom" at D page 55 has, t, herefore, stated that the single most important problem in constitutional law years to come in this country' will be how to implement the Directive Principles and at the same time give full play to the Fundamental Rights. It is only by implementing the Directive Principles that distributive justice will be achieved in the society. Justice, as Artistotle said, E "is the bond of men in society" and "states without justice" are, as St.

Augustine said, "robber-bands".

In Keshvananda Bhani's case, Jaganmohan Reddy, J. had held that "what is implicit in the Constitution is that there is duty on the courts to interpret the Constitution and the laws to further the Directive Principles which under Article 37 are fundamental in the governance of the country'.

The majority had held in favour of the way for the implementation of the Directive Principles under rule of law. Justice Palekar, in particular, had laid emphasis on social and economic justice to make Fundamental Rights a reality.

Coming to the meaning of "regulation" under the Act, in Blacks Law dictionary (sixth edition) at page 1286 the work "regulation" is defined as

"the act of regulating; a rule or order prescribed for management or government; a regulating principle; a precept. Rule or order prescribed by H superior or competent authority relating to action of those under its

AIRIND!ASTATUIDRYCORPN.,. UNIONIABOURUNION(KRAMASWAM, YJ.J 643

control". In Corpus Juris Secunderon (Vol. 76) at page 612, the power to A regulate carries with it full power or the thing subject to regulation and in the absence of restrictive words, the power must be regarded as plenary or the interest of public. It has been held to contemplate or employ the continued existence of the subject matter. In "Craise on Statute Law" (7th Edition) at page 258, it is stated that if the legislation enables something B to be done, it gives power at the same time "by necessary implication, to do everything which is indispensable for the purpose of carrying out the purpose in view''. In D.K. V. Prasada Rao & Anr. v. The Government of Andhra Pradesh represented by its Secretary, _Home Department Secretariat Buildings, Andhra Pradesh Hyderabad & Ors., {1983) 2 A WR 344 = AIR {1984) AP, a Division Bench of the Andhra Pradesh High Court, (to which C one of us, K. Ramaswamy, J., was a member) had to consider the question elaborately whether the power to regulate Cinematograph Act and Andhra Pradesh Cinematograph Regulation would include power to fix rates of admission under the cinema/theatres. Though there was no specific power under the Act or the Regulation to fix rates of admission, it was held at D page 360 that "power to regulate would include power to for the rate of admission into the cinema/theaters''. Lord Justice Hale of England about three centuries ago in his treatise "De Portibus Moris" reported in Harg Law Tracts 78 had stated that "when the private property is affected with a public interest, it ceases tci be. "juris privati" only and it becomes colthed E with a public interest when used in a manner to make it of public consequence and affe, Ct the community at large; and so using it, the owner grants to the public an interest in that use, and must submit to be controlled by the public for common good''. This statement was quoted with approval by ihe Supreme Court of United States of America in 1876 in the leading judgment, Munn v. The Peopl~ of Illinois, 94 US 115. Justice Whaite dealing with the question whether the legislature can fix the rates for storage of grains in private warehouses by a statute of 1871 when its interpretation had come up for consideration of right to property ancl its enjoyment and

of the public interest, it was held that "under such circumstances it is difficult to see why, if the common carrier or the miller, or the ferrymen G or the innkeeper or the wharfinger or the baker, or the cartmen, or the chakney-coachman, pursues a public employment and exercises "a sort of public office," these plaintiffs in error do not. They stand, to use again the language of their counsel, in the very "gateway of commerce'', take toll from all who pass. Their business "most certainly tends to be a common charge H

A and has become a thing of public interest and use." Therein, there is a specific observation which is apposite to the facts in this case. It was held that the statute simply extends the law so as to meet this new development of commercial progress. There is no attempt to compel the owners to grant the public an interest in their property, but the Act declares their obliga- B ti on, if they use it in the particular manner. It is immaterial whether the plaintiffs therein had built their warehouses and established their business before the regulation was made. It was held that after the regulation has come into force, they are enjoined to abide by the regulation to carry on the business. This Court had .approved the ratio in Prasadrao's case; when it was followed by Karnataka High Court against which an appeal came to C .be filed and the power to regulate rates of admission into cinema/theaters was upheld by this Court.

In Horatio J. Olcott v. County Board of Supe1visors of Fond Du Lac County, 21 L.Ed. 382 at 388, the Supreme Court of United States of D America had held that whether the railroad is a private or a public one, the ownership thereof is not material that the ownership may be private company but they are compellable to permit the public to use their works in the manner in which such work can be used. In John 0. Graham, Commissioner, Department of Public Welfare, State of Arizona v. Carmen Richardson Etc., 29 L.Ed 2nd 534, the question was whether the respondent E alien in Arizona will be denied of welfare benefits offending 14th Amendment to the American Constitution. Interpreting 14th Amendment, the Supreme Court of United States of America had held that the word "person" in the context of welfare measures encompasses lawfully resident aliens as well as citizen of the United States and both citizen and alien are F entitled to the equal protection of the laws of the State in which they reside.

The power to deny the welfare benefit was negated by judicial pronouncement. In Grace Marsh v. State of Alabama, 90 L.Ed. 265, when the appellant was distributing pamphlets in privately owned colony, he was convicted of the offence of trespass on Albama Statue. On writ of certiorary, the Supreme Court of United States of America deciding the right to pass and G repass and the right of freedom of expression and equality under 14th amendment, had held by majority that the Corporate's right to control the inhabitants of the colony is subject to regulation but the ownership does not always mean absolute denomination. The more an owner, for his advantage, opens up his property in use by public in general, the more do his right become circumscribed by statutory and constitutional rights of H those who use it. The conviction was in violation of !st and 14th Amend-

A!RINDJASTATIITORYCORPN.,. UNION!ABOURUNION[K.RAMASWAMY, J.) 645

men!. In Republic Aviation Corporation v. National Labour Relations Board, A 324 US 793 = 89 L.Ed. 1372, the owner of privately held bridges, ferries, turnpikes and railroads etc. may operate them as freely as a farmer does his farm, but when it operated privately to benefit the public, their operation is essentially a public function. It was subject to State regulation. The Supreme Court, therefore, had held that when the rights of the private owners and the constitutional rights require interpretation, the balance has B to be struck and the Court would, mindful of the fact that the right to exercise liberties safeguarded by the Constitution lies at the foundation of free government by free men, in all cases weigh the circumstances and appraise the reasons in support of the regulations of the rights etc. It was accordingly held that for interpretation of the rights of the private owner C vis-a-vis constitutional rights, it is but the duty of the Court to weigh the balance and to consider the case in the dropback. It Georgia Railroad & Banking Co. v. James M Smith, 128 US 377 = 32 L.Ed. 174, it was held that in the absence of any provision in the charter, legislature has power to prescribe rates when the property is put to public use and the statute was held to be constitutional. Gennan Aliance Insurance Co. v. !KL Lews, D 58 L.Ed. 1011 = 233 US 387, per majority it was held that a business may be as far as affected with a public interest as to permit legislative regulation of its rates and charges, although no public trust is imposed upon the property and although public may not have a legal right to demand and receive service.

It is true in Dena Nath's case, a Bench of two Judges was to consider the question whether or not the persons appointed as contract labour in violation of Sections 7 and 12 of the Act should be deemed to be direct employees of the principal employer. The Bench on literal consideration of the provisions, had concluded that the Act merely regulates conditions of service of the workmen employed by a contractor and engaged by the principal employer. On abolition of such contract labour altogether by the appropriate Government neither the Act nor the rules provide that labour should be directly absorbed by the principal employer. It was, therefore, concluded that the High Court exercising the power under Article 226 of

the Constitution cannot give direction for absorption. True, Court cannot G enquire into and decide the question whether employment of contract labour in any process operation or any other work in establishment should be abolished or not and it is for the appropriate Government to decide it.

The Act does not provide total abolition of the contract labour system under the Act. The Act regulates contract labour system to prevent exploitation of the contract labour. The preamble of the Act furnishes the H

A key to its scope and operation. The Act regulates not only employment of contract labour in the establishment covered under the Act and its abolition in certain circumstances covered under Section 10(2) but also "matters connected therewith". The phrase "matters connected therewith" gives clue to the intention of the Act. We have already examined in detail the

B operation of the provisions of the Act obviating the need to reiterate the same once over. The enforcement of the provisions to establish canteen in every establishment under Section 16 is to supply food to the workmen at the subsidised rates as it is a right to food, a basic human right. Similarly, the provision in Section 17 to provide rest rooms to the workmen is a right to leisure enshrined in Article 43 of the Constitution. Supply of wholesome C drinking water, establishment of latrine and urinals as enjoined under

Section 18 are part of basic human right to health assured under Article 39 and right to just and human conditions of work assured under Article

42. All of them are fundamental human rights lo the workmen and are facets of right to life guaranteed under Article 21. When the principal employer is enjoined to ensure those rights and payment of wages while D the contract labour system is under regulation, the question arises whether after abolition of the contract labour system that workmen should be left in a lurch denuding them of the means of livelihood and the enjoyment of the basic fundamental rights provided while the contract labour system is regulated under the Act? The Advisory Committee constituted under Section 10(1). requires to consider whether the process, operation and E other work is incidental to or necessary for the indus(ry, trade, business, manufacture or occupation that is carried on in the establishment, whether it is of a perennial nature, that is to say, whether it is of substantive duration having regard to the nature of indus(ry, trade, business, manufacture or

 occupation carried on in that establishment, whether it is done ordinarily through regular workmen in the establishment or an establishment similar thereto, whether it is sufficient to employ considerable number of whole time workmen. Upon consideration of these facts, recommendation for abolition was made by the Advisory Board for the appropriate Government to examine the question and tak~ a decision in that behalf. The explanation to Section 10(2) provides that when any process or operation or other work G is of perennial nature, the decision of the appropriate Government thereon shall be final. It would thus give indication that on the abolition of the contract labour system by the publication of the notification in the official Gazette, the necessary concomitant is that the whole time workmen are required for carrying on the process, operation or other work being done in the industry, trade, business, manufacture or occupation in that estab- H

. AIRINDIASfATUTORY CORPN. ' UNION !ABDUR UNION (KRAMASWAMY, J.J 647

lishment. When the condition of the work which is of perennial nature etc., A as envisaged in sub-section (2) of Section 10, thus are satisfied, the continuance of contract labour stand prohibited and abolished. The concomitant result would be that source of regular employment becomes open.

What would be the consequence that ensue from abolition is the question?It is true that we find no express provision in the Act declaring the contract labour working in the establishment of the principal employer in the particular service to be the direct employees of the principal employer. Does the Act intend to deny the workmen to continue to work under the Act or does it intend to denude him of the benefit of permanent employment and if so, what would be the remedy available to him. The phrase "matters connected therewith" in the Preamble would furnish the consequence of abolition of contract labour. In this behalf, the Gujarat Electricity Board case, attempted, by interpretation, to fill in the gap but it also fell short of full play and got beset with insurmountable difficulties in

its working which were not brought to the attention of the Bench. With due D respect such scheme is not within the spirit of the Act. As seen, the object

is to regulate the contract labour so long as the contract labour is not perennial. The labour is required to be paid the prescribed wages and are provided with other welfare benefits envisaged under the Act under direct supervision of the principal employer. The violation visits with penal consequences. Similarly, when the appropriate Govermnent finds that the E employment is of perennial nature etc. contract system stand abolished, thereby, it intended that if the workmen were performing the duties of the post which were found to be of perennial nature on par with regular service, they also require to be regularised. The Act" did not intend to denude them of their source of livelihood and means of development, throwing them out from employment. As held earlier, it is a socio-economic welfare legislation. Right to socio-economic justice and empowerment are constitutional rights. Right to means of livelihood is_ also constitutional right. Right to facilities and opportunities are only part of and means to right to development. Without employment or appointment, the workmen G will be denuded of their means of livelihood and resultant right to life, leaving them in the lurch since prior to abolition, they had the work and thereby earned livelihood. The Division Bench in Dena Nath's case has taken too narrow a view on technical consideration without keeping at the back of the mind the constitutional animations and the spirit of the

1 provisions and the object which the Act seeks to achieve. The operation of H

A the Act is structured on an inbuilt procednre leaving no escape route.

Abolition of contract labour system ensures right to the workmen for regularisation of them as employees in the establishment in which they were hitherto working as contract labour through the contractor. The contractor stands removed from the regulation under the Act and direct relationship of "employer and employee" is created between the principal employer and workmen. Gujarat Electricity's case, being of the co-ordinate Bench, appears to have softened the rough edges of Dena Nath's ratio. The object of the Act is to prevent exploitation of labour. Section 7 and Section 12 enjoin the principal employer and the contractor to register under the Act, to supply the number of labour required by the principal employer C through the contractor; to regulate their payment of wages and conditions of service and to provide welfare aminities, during subsistence of the contract labour. The failure to get the principal employer and the contractor registered under the Act visits with penal consequences under the Act.

The object, thereby, is to ensure continuity of work to the workmen in strict D compliance of law. The conditions of the labour are not left at the whim and fancy of the principal employer. He is bound under the Act to regulate and ensure payment of the full wages, and also to provide all the amenities enjoined under Sections 16 to 19 of the Act and the rules made thereunder.

On abolition !'f contract labour, the intermediary, i.e., contractor, is removed.

E from the field and direct linkage between labour and principal employer is established. Thereby, the principal employer's obligation to absorb them arises. The right of the employee for absorption gets ripened and fructified.

If the interpretation in Dena Nath's case is given acceptance, it would be an open field for the principal employer to freely flout the provisions of the

F Act and engage workmen in defiance of the Act and adopt the principle of hire and fire making it possible to exploit the appalling conditions in which the workmen are placed. The object of the Act, thereby gets rudely shattered and the object of the Act easily defeated. Statutory obligations of holding valid licence by the principal employer under Section 7 and by the contractor under Section 12 is to ensure compliance of the law. Dena G Nath's ratio falls foul of the constitutional goals of the trinity; they are free launchers to exploit the workmen. The contractor is an intermediary between the workmen and the principal employer. The moment the contract labour system stands prohibited under Section 10(1), the embargo to continue as a contract labour is put an end to and direct relationship has H been provided between the workmen and the principal employer. Thereby,

AIR IND!ASTATUIDRY CORPN. ' UNION LABOUR UNION [KRAMASWAMY, l.] 649

the principal employer directly becomes responsible for taking the services A of the workmen hitherto regulated through the contractor. The object of the penal provisions was to prevent the prohibition of the employer to commit breach of the provisions of the Act and to put an end to exploitation of the labour and to deter him from acting in violation of the constitutional right of the workmen to attain decent standard of life, living, wages, B right to health etc.

The founding fathers placed no limitation or fetters on the power of the High Court under Article 226 of the Constitution except self-imposed limitations. The arm of the Court is long enough to reach injustice wherever it is found. The Court as sentinal in the qui vive is to mete out justice in C given facts. On finding that either the workmen were engaged in violation of the provisions of the Act or were continued as contract labour, despite prohibition of the contract labour under Section 10(1), the High Court has, by judicial review as the basic structure, constitutional duty to enforce the law by appropriate directions. The right to judicial review is now a basic D structure of the Constitution by catena of decisions of this Court starting from Indira Gandhi v. Raj f'{arayan, AIR (1975) SC 2299 and Bommai's case. It would, therefore, be/necessary that instead of leaving the workmen in the lurch, the Court would properly mould the relief and grant the same in accordance with Jaw.

The public law remedy given by Article 226 of the constitution is to issue not only the prerogative writs provided therein but also any order or direction to enforce any of the fundamental rights and "for any other purpose". The distinction between public law and private law remedy by judicial adjudication gradually marginalised and became obliterated. In F L.J.C. v. Escorts Ltd. & Ors., [1986] 1 SCC 264 at 344, this Court in paragraph 102 had pointed out that the difficulty will lie in demarcating the frontier between the public law domain and the private law field. The question must be decided in each case with reference to the particular action, the activity in which the State or the instrumentality of the State is G engaged when performing the action, the public law or private law character of the question and the host of other relevant circumstances. Therein, the question was whether the management of LIC should record reasons for accepting the purchase of the shares? It was in that fact situation that this Court held that there was no need to state reasons when the management of the shareholders by resolution reached the decision. This Court H

A equally pointed out in other cases that when the State's power as economic power and economic entrepreneur and allocator of economic benefits is subject to the limitation of fundamental rights, a private Corporation under the functional control of the State engaged in an activity hazardous to the health and safety of the community, is imbued with public interest which B the State ultimately proposes to regulate exclusively on its industrial policy.

It would also be subject to the same limitations as held in M. C. Mehta & Ors. v. Union of India & Ors., [ 1987] 1 SCC 395.

The legal right of an individual may be foun, ded upon contract or a statute or an instrument having the force of law. For a public law remedy C enforceable under Article 226 of the Constitution, the action of the authority needs to fall in the realm of public law • be it a legislative act of the State, an executive act of the State or an instrumentality or a person or authority imbued with public law element. The question requires to be determined in each case. However, it may not be possible to generalise the D nature of the action which would come either under public law remedy or private law field nor is it desirable to give exhaustive list of such actions.

As held by this Court in Calcutta Gas Co. Ltd. v. State of West Bengal, AIR

(1961) SC 1044 para 5 that if the legal right of a Manager of a company is denuded on the basis of recommendation by the Board of Management of the company, it would give him right to enforce his right by filing a writ E petition under Article 226 of the Constitution. In Mu/chand v. State of M.P.,

AIR (1968) SC 1218, this Court had held that even though the contract was void due to non-compliance of Article 229, still direction could be given for payment of the amount on the doctrine of restitution tinder Section 70 of the Act, since the State had 'derived benefit under the void contract. The F same view was reiterated in State of West Bengal v. V:K Manda/ & Ors., AIR (1962) SC 779 at 789 and in New Marine Coal Co. Ltd. v. Union of India, [1964] 2 SCR 859. In Gujarat State Financial Corporation v. Lotus Hotel, [1983] 3 SCC 370, a direction was issued to release loan to the respondent to comply with the contractual obligation by applying the doctrine of promissory estoppel. In Mahabir Auto Store v. Indian Oil G Corporation, [1990] 3 sec 752, contractual obligations were enforced under public law remedy of Article 226 against the instrumentality of the State. In Shreelekha Vidyarthi v. State of U.P., [1991] 1 SCC 212 contractual obligations were enforced when public law element was involved. Same judicial approach is adopted in other jurisdictions, namely, the House of H Lords in Gillie v. West Noifolk and Wisbech Area Health Authority, (1986)

AIRINDIASfATUTORY CORPN. "· UNION LABOUR UNION [KRAMASWAMY, J.J 651

. . \.

AC 112 wherein the House of Lords held that though the claim of the A plaintiff was negatived but on the anvil of power of judicial review, it was held that the public law content of the claim was so great as to make her case an exception to the general rule. Similarly in Dr. Roy v. Ke11sinstone and Chelsea Family Practioners Committee, (1992) !AC 624, the House of Lords reiterated that though a matter of private law is enforceable by B ordinary actions, a court also is free from the constraints of judicial review and that public law remedy is available when the remuneration of Dr. Roy was sought to be curtailed. In L.I. C v. Co11Sumer Education and Research Centre & Ors., [1995] 5 SCC 482, this Court held that each case may be examined on its facts and circumstances to find out the nature and scope of the controversy. The distinction between public law and private law C remedy has now become thin and practically obliterated.

In writ petition filed under Article 32 of the Constitution of India, the petitioners, in R.K. Panda & Ors. v. Steel Authority of India & Ors.,

[1994] 5 sec 304, contended that they had been working in Rourkela Plant D of the Steel Authority of India for period ranging between 10 and 20 years as contract labour. The employment was of perennial nature. The nonregularisation defeated their right to a job. The change of contractors under the terms of the agreement will not have any effect on their continuing as a contract labour of the predecessor contractors. The respondent contended that due to modernisation of the industry, the contract labour E are likely to be retrenched. They were prepared to allow the contract labour to retire on voluntary basis or to be absorbed for local employment.

A Bench of three Judges of this Court had held that the contract labour were continuing in the employment of the respondent for last 10 years, in spite of change of contractors, and hence they were directed to be ab- F sorbed as regular employees. On such absorption, their inter se seniority be determined, department or job-wise, on the basis of continuous employment; regular wages will be payable only for the period subsequent to absorption and for the period thereto. Such of those contract labour in respect of whom the rate of wages have not fixed, the minimum rate of G wages would be payable to such workmen of the wages of the regular employees. The establishment was further directed to pay the wages. If the staff is found in excess of the requirement, the direction for regularisation would not stand in their way to retrench the workmen in accordance with law. If there arises any dispute as regards the identification of the contract labour to be absorbed, the Chief Labour Commissioner, Central Govern- H

A ment, on evidence, would go into that question. The retrenched employees shall also be entitled to the benefit of the decision. The 10 year period mentioned by the Court would count to calculate retrenchment benefits.

This ratio is an authority for several propositions. In spite of there being no report by the Advisory Board under Section 10(2) and no prohibition

B under Section 10(1), the Act was enforced and this Court directed to absorb them within the guidelines laid down in the judgment. This ratio also is an authority for the proposition that the jurisdiciion of the Court under Article 32, pari mate1ia with Article 226 which is much \vider than Article 32 "for any other purpose" under which suitable directions are required to be given based on factual background. Therein the need to C examine the correctness of Dena Nath's ratio did not arise nor is it a case of abolition of contract labour. So, its reference to be as a statement of laying the law in Dena Nath's case.

Prior to the Act came into force, in The Standard-Vacuu1n Refining D Co. of India v. Its Workmen & Ors., [1969] 3 SCR 466, a Bench of three

'fudges of this Court had held that the contract labour, on reference under Section 10 of the ID Act was required to be regularised, after the industrial dispute was adjudicated, under Section 2(k) of the ID Act. Since workmen had substantial interest in dispute, it was held that the direction issued by the Tribunal that the contract labour be abolished was held just in the E circumstances of the case and should not be interfered with. In other words, this Court upheld the jurisdiction of the Tribunal after deciding the dispute as an industrial dispute and gave direction to abolish the contract labour. The power of the Court is not fettered by the absence of any statutory prohibition.

F In Security Guards Board for Greater Bombay and Thane District v.

Security & Personnel Service Pvt. Ltd. & Ors., [1987] 3 SCC 413, the question as regards absorption of security guards employed in any factory or establishment etc. under Maharashtra Private Security Guards (Regulation of Employment and Welfare) Act, 1981 had come up for considera- G tion. It was held that the exemption under Section 23 is in regard to the security guards employed in the factory or establishment or in any class or classes of fabricating factory's establishment. The co-relationship of the security guards or classes of security guards who may be exempted from the operation of the Act is with the factory or establishment or class or H classes of factories or establishments in which they work and not with the

AIR INDJASfATL TORY CORPN. ' UNION IABOUR UNION [KRAMASWAMY, J.) 653

agency or agent through and by whom they were employed. In other words, A the ratio of that case is that it is not material as to through which contractor the employee came to be appointed or such labour came to be engaged in the establishment concerned. The direct relationship would emerge after the abolition of the contract labour. In Sankar Mukherjee & Ors. v. Union of India & 01>·., AIR (1990) SC 532, the State Government exercising the power under Section 10 of the Act prohibited employment of contract labour in cleaning and stacking and other allied jobs in the brick department. Loading and unloading of bricks from wagons and trucks was not abolished. Writ petition under Article 32 of the Constitution of India was filed. A Bench of three Judges of this Court had held that the Act requires to be construed liberally so as to effectuate the object of the Act. The bricks transportation to the factory, loading and unloading are continuous process; therefore, all the jobs are incidental to or allied to each other. All the workmen performing these jobs were to be treated alike. Loading and unloading job and the other jobs were of perennial nature. Therefore, there

was no justification to exclude the job of loading and unloading of bricks D from wagons and trucks from the purview of the notification dated February 9, 1980. Thus, this Court had given direction to abolish the contract labour system and to absorb the employees working in loading and unloading the bricks which is of perennial nature. In national Federation of Railway Porters, Vendors & Bearers v. Union Of India & Ors., [1995] 3 SCC

152, a Bench of two Judges, to which one of us (K. Ramaswamy, J.) was a E member, was to consider whether the Railway Parcel Porters working in

the different railway stations were contract labour for several years. When they filed writ petition, the Central Assistant Labour Commissioner was directed to enquire and find out whether the job is of a permanent and perennial nature and whether the petitioners were working for a long period. On receipt of the report, with findings in favour of workers, the Bench had directed the Railway Administration to regularise them into the service. This case also is an authority for the proposition t,!iat in an appropriate case the Court can give suitable directions to the competent authority, namely, Central Labour Commissioner to enquire and submit a report. The perennial nature of the work and other related aspects are G required to be complied with before directions are given under of Section 10(1) and 10(2) of the Act. On receipt of the report, the Court could mould the relief in an appropriate manner to meet the given situation. In Fraga Tools case, this Court held that mandamus may be issued to enforce duties H

A and positive obligation of a public nature even though the persons or the authorities are not public officials or authorities. The same view was laid in Anadi Mukta v. V.R. Rudani, [1989] 2 SCC 691 and Unni Krishnan v.

State of A.P., [1993] 1 SCC 645. In Comptroller & Auditor General of India

v. KS. Jagannathan, [1986] 2 SCC 679, this Court held that a mandamus

B would be issued to implement Directive Principles when Government have adopted them. They are under public obligations to give preferential treatment implementing the rule of reservation under Articles 14 and 16(1) and (4) of the Constitution. In L.l.C. case, directions were issued to frame policies accessible in common man.

C Thus, we hold that though there is no express provision in the Act for absorption of the employees whose contract labour system stood abolished by publication of the notification under Section 10(1) of the Act, in a proper case, the Court as sentinal in the qui vive is required to direct the appropriate authority to act in accordance with law and submit a report D to the Court and based thereon proper relief should be granted.

It is true that learned counsel for the appellant had given alternative proposal, but after going through its contents, we are of the view that the proposal would defeat, more often than not, the purpose of the Act and keep the workmen at the whim of the establishment. The request of the E learned Solicitor General that the management may be left with that discretion so as to absorb the workman in the best manner favourable to the workmen cannot be accepted. In this behalf, it is necessary to recapitulate that on abolition of the contract labour system, by necessary implication, the principal employer is under statutory obligation to absorb the F contract labour. The linkage between the contractor and the employee stood snapped and direct relationship stood restored between principal employer and the contract labour as its employees. Considered from this perspective, all the workmen in the respective services working on contract labour are required to be absorbed in the establishment of the appellant.

Though there exists no specific scale of pay to be paid a regular employees, G it is for the establishment to take such steps as are necessary to prescribe scale of pay like class 'D" employees. There is no impediment in the way of the appellants to absorb them in the last grade, namely, grade IV employees on regular basis. It is seen that the criteria to abolish the contract labour system is the duration of the work, the number of H employees working on the job etc. That would be the indicia to absorb the

AIR INDIA STATUTORY CORPN. ' UNION !ABDUR UNION [KRAMASWAMY, !.) 655

employees on regular basis in the respective services in the establishments. A Therefore, the date of engagement will be the criieria to determine their inter se seniority. In case, there would be any need for retrenchment of any excess staff, necessarily, the principle of "last come, fist go" should be applied subject to his reappointment as and when the vacancy arises.

Therefore, there is no impediment in way of the appellants to adopt the above procedure. The award proceedings as suggested in Gujarat Electricity Board case are beset with several incongruities and obstacles in the way of

the contract labour for immediate absorption. Since, the contract labour gets into the service of the principal employer, the Union of the Existing employees may not espouse their cause for reference under Section 10 of the ID Act. The workmen, on abolition of contract labour system have no C right to seek reference under Section 10 of!D Act. Moreover, the workmen immediately are kept out of job to endlessly keep waiting for award and thereafter resulting in further litigation and delay in enforcement. The management would always keep them at bay for absorption. It would be difficult for them to work out their right. Moreover, it is a tardy and D time-consuming process and years would role by. Without wages, they cannot keep fighting the litigation endlessly. The right and remedy would be a teasing illusion and would be rendered otiose and practically compel the workmen to remain the mercy of the principal employer. Considered from this pragmatic perspective, with due respect to the learned Judges, E the remedy carved out in Gujarat Electricity Board case would be unsatisfactory. The shortcomings were not brought to the attention of this Court.

So, that part of the direction in Gujarat Electricity Board case is not, with due respect to the Bench, correct in law. The Dena Nath's case, as held earlier, has not correctly laid down the law. Therefore, it stands over-ruled.

Moreover, the Bombay High Court has correctly held that the High Court under Article 2, l6 of the Constitution would direct the principal employer to absorb the contract labour, after its abolition, even though some of the contractors have violated Section 12 of the Act and the appellants have violated Section 7 of the Act. In the judgments under appeal, High Court

has directed to absorb the services of the workman from the date of the G judgment. The respondent-Union did not challenge it. We are, therefore, constrained not to grant the benefit to the employees of the respondent- Union from the date of the abolition of the contract labour system. We, therefore, uphold the direction issued by the High Court to regularise their services with effect from the respective dates of the judgments of the High H

SUPREME COURT REP OR TS (1996] SUPP. 9 S.C.R.

A Court with all consequential benefits. Before conclusion, we express our deep appreciation for valuable assistance given by all the learned counsel . in the appeals.

The appeals are accordingly dismissed, but, in the circumstances, without costs.

S.B. MAJMUDAR, J. : (Concurring Judgment) I have gone through the lucid and erudite judgment prepared by learned Brother Ramaswamy, J. I wholly concur with what has been held therein. I endorse each and every conclusion to which my learned Brother Ramaswamy, J. has reached.

C However, as the fate of erstwhile contract labour on abolition of contract labour system under the provisions of Section 10(1) of the Contract Labour (Regulation and Abolition) Act, 1970 has always raised a vaxed question before the High Courts and before this Court. I have thought it fit to pen my observations on this question. It is true that a Bench of two-Judges of D this Court to which I was a party in the case of Gujarat Electricity Board, Thennal Power Station, Ukai, Gujarat v. Hind Mazdoor Sabha & Ors., [1995) 5 SCC 27 in the light of earlier judgment of two-Judges' Bench of this Court in the case of Dena Nath v. National Fertilizers Ltd., [1992] 1 SCC 695 had to soften the rigour of the latter decision, by trying to evolve a locus paenitentiae for contract labourers on abolition of their contract labour E from the establishment. But on further consideration it is found, as rightly held by Brother Ramaswamy, J., that such a scheme would not be workable. Under the Contract Labour (Regulation and Abolition) Act, 1970 (hereinafter referred to as 'the Act') twin methodology had been adopted by the legislature. In the first instance, it sought to regulate contract labour p employed in any establishment wherein such labour was not of a perennial nature but had to be regulated so that the right to life available to workmen as per Article 21 would not be rendered illusory. Various welfare measures have been provided by the Act in connection with such regulations. The contract workers who are engaged by the contractor for the benefit of the principal employer are brought within the beneficial sweep of Chapter V G of the Act. Section 16 deals with provision of canteens for such workmen.

Section 17 deals with rest-rooms. Section 18 enjoins the contractor employing such contract labour in connection with work of such establishment to provided sufficient supply of wholesome drinking water as well as sufficient number of latrines and urinals of the prescribed types and washing H facilities. Section 19 enables such contract labour to get first aid facilities

AIR INDIA STA TlJTORY CORPN. ' UNION LABOUR UNION [S.B. MAJMUDAR I] 657

to be provided in the establishment. Section 20 imposes on the principal A employer liability to discharge the obligations regarding providing of amenities as laid down by Sections 16, 17, 18 and 19 for the benefit of the contract labour employed in the establishment, if the contractor defaults in his duties. Section 21 enjoins the principal employer to see to it that proper wages are paid to such contract labour and to nominate a repre- B sentative duly authorised by him to be present at the time of disbursement of wages by the contractor and it shall be the duty of such representative to certify the amount paid as wages as laid down by Section 21. Sub-service ( 4) of Section 21 makes the principal employer liable to pay such wages to the contract labourers if the contractor fails to make payment of their wages, and then to recover the same from the contractor. Chapter VI deals C with penalties and procedure for enforcement of these welfare measures for the benefit of the contract labourers who are brought within the regulatory sweep of the Act. This is one facet of the Act. The other object of the Act is to abolish the contract labour system. In cases where the contract labour is employed on a work which is of perennial nature, that D is to say, it is of sufficient duration having regard to the nature of industry, trade, business, manufacture or occupation that is carried on in the establishment of the principal employer. As per Section 10(2) of the Act, once conditions laid down therein are satisfied, the appropriate Government on the report of the Advisory Board has to abolish contract labour system from such process, operation or other work in an establishment. The

E conditions for undertaking such an exercise by such Government in connection with the establishment of principal employer are laid down by Section 10(2) clauses (a) to ( d). These conditions clearly indicate that the work which the contract labourers are doing is of a perennial nature and is incidental to or necessary for the industry, trade, business, manufacture F or occupation carried on in that establishment and it is otherwise done ordinarily through regular workmen in that establishment or an establishment similar thereto and it is sufficient to em11loy considerable number of whole time workmen. Once these conditions art 'Stablished, on the basis of the report of the advisory board concerned, i1 . an obligation of the appropriate Government to abolish such contract I 1ur system prevailing G in the given process or operation in the establishme. .

Now the moot question is as to what happens after such prohibition.

It is obvious that prior to abolition, the contract labour doing work of perennial nature on the establishment of principal employer had the ad- H

A vantage of regulatory provisions found in Chapter V and these provisions were given teeth by the legislature in Chapter VI by providing for penalties and procedure for imposition of sanctions by prosecution. The question is whether after abolition of contract labour system, the contract labourers who were earlier having regulatory protections would be rendered perso11a B 11011 grata and would be thrown out from the establishment and told off the gates. Then in such a case the remedy of abolition of contact labour would be worse than the disease and it has to be held that the legislature while trying to improve the lot of erstwhile contract labourers who are doing work of perennial nature for the principal employer and are doing work C which is otherwise to be done by regular workmen had really left them in the lurch by making them lose all the facilities available to contract labour on the establishment as per Chapter V and desired them to wash their hands of the establishment and get out and face starvation. It is axiomatic that if they continued to be contract labourers their wages would have been D guaranteed nnder Section 21 of the Act with an obligation in the principal ·

employer to pay them if the contractor fails to discharge his obligation in connection with payment of wages. Wages are the livelihood of workman and his large number of dependents. If on abolition of contract labour system, contract labour itself is to be abolished, it would cause economic ruin and economic death to contract labourer and his dependents for E amelioration of whose lot order under Section 10 is to be passed. If it is held that on abolition of contract labour system, the erstwhile contract labourers are to be thrown out of the establishment, lock, stock and barrel, it would amount to throwing the baby out with the bath water. That obviously cannot be the scope, ambit and purport of Section 10 of the Act.

F It has to be kept in view that contract labour system in an establishment is a tripartite system. In between contract workers and the principal employer is the intermediary contractor and because of this intermediary the employer is treated as principal employer with various statutory obligations flowing from the Act in connection with regulation of the working condi- G tions of the contract labourers who are brought by the intermediary contractor on the principal's establishment for the benefit and for the purpose of the principal employer and who do his work on his establishment through the agency of the contractor. When these contract workers carry out the work of the principal employer which is of a perennial nature and H if provisions of Section 10 get attracted and such contract labour system in

AIR INDIA ST ATITTOR Y CORPN. '- UNION JABOUR UNION IS.B. MAJMUDAR J.) 659

the establishment gets abolished on fulfillment of the conditions requisite A for that purpose, it is obvious that the intermediary contractor vanishes and along with him vanishes the term 'principal employer'. Unless there is a contractor agent there is no principal. Once the contractor intermediary goes the term 'principal' also goes with it. Then. remains out of this tripartite contractual scenario only two parties - the beneficiaries of the B abolition of the erstwhile contract labour system i.e. the workmen on the one hand and the employer on the other who is no longer their principal employer but necessarily becomes a direct employer for these erstwhile contract labourers. It was urged that Section 10 nowhere provides for such a contingency in express term. It is obvious that no such express provision C was required to be made as the very concept of abolition of a contract labour system wherein the work of the contract labour is of perennial nature for the establishment and which otherwise would have been done by regular workmen, would posit improvement of the lot of such workmen and not its worsening. Implicit in the provision of Section 10 is the legislative intent that on abolition of contract labour system, the erstwhile con- D tract-workmen would become direct employees of the employer on whose establishment they were earlier working and were enjoying all the regulatory facilities on that very establishment under Chapter V prior to the abolition of such contract labour system. Though the legislature has expressly not mentioned the consequences of such abolition, but the very E scheme and ambit of Section 10 of the Act clearly indicates the inherent legislative intent of making the erstwhile contract labourers direct employees of the employer on abolition of the intermediary contractor. It was contended that contractor might have employed a number of workmen who may be in excess of the requirement and, therefore, the principal p employer on abolition of the contract labour may be burdened with excess workmen. It is difficult to appreciate this contention. The very condition engrafted in Section 10(2)( d) shows that while abolishing contract labour from the given establishment, one of the relevant considerations for the appropriate Government is to ascertain whether it is sufficient to appoint G considerable number of whole time workmen. Even otherwise there is an inbuilt safety valve in Section 21 of the Act which enjoins the principal employer to make payment of wages to the given number of contract workmen whom he has permitted to be brought for the work of the establishment if the contractor fails to make payment to them. It is, H

A therefore, obvious that the principal employer as a worldly businessman in his practical commercial wisdom would not allow contractor to bring larger number of contract labour which may be in excess of the requirement of the principal employer. On the contrary, the principal employer would see to it that the contractor brings only these number of workmen who are B required to discharge their duties to carry out the work of the principal employer on his establishment through, of course, the agency of the contractor, in fact the scheme of the Act and regulations framed thereunder clearly indicate that even the number of the workmen required from the given contract work is to be specified in the licence given to the C contractor. Consequently, the aforesaid apprehension projected on behalf of the principal employer is more imaginary than real. Even apart from that, after the absorption of the erstwhile contract workmen by the principal employer on abolition of contract labour system under Section 10, it is always open for the employer as an entrepreneur, in an appropriate case, if the excess working staff is not found to be required by him to retrench D such excess staff in accordance with law by following the provisions of the Industrial Disputes Act, 1947. But that has nothing to do with the moot question as to what is the fate or erstwhile contract labour on abolition of contract labour system under the provisions of Section 10 of the Act. As rightly observed by Brother Ramaswamy, J. in his judgment, the scheme E envisaged in the Gujarat Electricity Board's case is not workable as the existing workmen may not espouse the cause of erstwhile contract workmen who were aspiring to get employment on regular basis and even if they espouse their cause the litigation itself would be spread over a number of years and in the meantime the erstwhile contract labourers and their F dependents would starve. I, therefore, wholly agree with Brother Ramaswamy, J. in his view that the scheme envisaged by Gujarat Electricity Board's case is not workable and to that extent the said judgment cannot be given effect to.

Before parting with this judgment, it has to be appreciated that G engagement of contract labour has been found to be unjustified by a catena of decisions of this Court. When the work is of perennial nature and instead of engaging regular workmen, the system of contract labour is resorted to, it would only be for fulfilling the basic purpose of securing monetary advantage to the principal employer by reducing expenditure on work H fords. It wonld obviously be an unfair labour practice and is also an

AIRINDIASTATUIORY CXJRPN. v. UNION LABOUR UNION (S.B. MAJMUDAR, J.J 661

economically short-sighted and unsound policy, both from the point of view A of the undertaking concerned and the country as a whole. Such a system was tried to be put to end by the legislature by enacting the Act but when it found that there are certain activities of establishment where the work is not of perennial nature then the contract labour may not be abolished but still it would be rquired to be regulated so that the lot of the workmen is B not rendered miserable. The real scope and ambit of the Act is to abolish contract labour system as far as possible from every establishment. Consequently, on abolition which is the ultimate goal, the erstwhile regulated contract labour cannot be thrown out of establishment as tried to be submitted on behalf of the management taking resort to the express language of Section 10 of the Act. Such a conclusion reached by the two-Mem- C ber Bench in Dena Nath's case (supra), flies in the face of the very scope and ambit of the Act and frustrates the very scheme of abolition of contract labour envisaged by the Act. Such a conclusion, with respect, cannot be countenanced, as it results in a situation where relatives of the patient are told by the operating surgeon that operation is successful but patient has D died.

So far as the judgment of the three-Member Bench of this Court in R.K Panda & Ors. v. Steel Authority of India & Ors., (1994) 5 SCC 304 is concerned, it is true that in para 6 of the Report in the last four lines it is observed while referring to Dena Nath's case (supra) that neither the Act E nor the Rules framed by the Central Government or by any appropriate Government provide that upon abolition of the contract Jabour, the labourers would be directly absorbed by the principal employer, but that is not the ratio of the decision of the said three-Member Bench. It has only referred to what Dena Nath's case decided. It is also required to be noted F that the question which has been posed for our consideration is as to what is that fate of the erstwhile contract Jabour on abolition of contract labour system in the establishme.nt under Section 10 of the Act. Such a question had not come up for consideration before this Court in R.K Panda's case {supra). Therefore, it could not be urged that the ratio of Dena Nath's case G was approved by three-Member Bench in RK Panda's case (supra). In the latter case no abolition was directed by the appropriate Government under Section 10 of the Act. It was a case in which the contract labourers were claiming to be absorbed directly by the principal employer without there being any order under Section 10. Consequently, the question with which we are concerned in the present case did not fall for consideration of the H

A Bench in RK Pa11da's case (supra), nor had the Bench decided that question one way or the other. I, therefore, respectfully concur with the view taken by Brother Ramaswamy, J. on the scope and ambit of Section 10 of the Act and hold that on abolition of the contract labour system from any establishment under Section 10 of the Act by the appropriate Government the logical and legitimate consequences thereof will be that the B erstwhile regulated contract labour covered by the sweep of such abolition for the concerned activities would be entitled I to be treated as direct employees of the employer on whose establishment they were ear lier working and they would be entitled to be treated as regular employees at least from the day on which the contract labour system in the establishment for the work which they were doing gets abolished.

T.N.A.

Appeals dismissed.