IN THE SUPREME COURT OF PAKISTAN 
(Appellate Jurisdiction) 
 
 
PRESENT: 
Mr. Justice Iftikhar Muhammad Chaudhry, CJ 
Mr. Justice Jawwad S. Khawaja 
Mr. Justice Ijaz Ahmed Chaudhry 
 
 
Civil Appeals Nos. 83 and 84 of 2006. 
(Against the judgment dated 16.3.2005 
passed by the High Court of Sindh, Karachi 
in Const. P. D-739 of 1993 and D-754 of 
1996)  
 
 
Fauji Fertilizer Company Ltd. Thr. its Factory Manager 
 
 
 
 
 
 
 
 
… 
Appellants 
 
 
 
 
 
 
 
VERSUS  
National Industrial Relations Commission thr. Chairman etc. 
 
 
 
 
 
 
 
 
 
…       Respondents 
 
 
 
 
 
 
 
For the appellants: 
Mr. Khalid Anwar, Sr. ASC 
Raja Abdul Ghafoor, AOR  
assisted by Barrister Muhammad Anas Makhdoom 
Adv. 
 
For the respondents: 
Mr. Abid Hassan Minto, Sr. ASC 
 
 
 
 
Ch. Akhtar Ali, AOR 
 
 
 
 
Respondent No.2 in CA 83/06) 
Respondent No.3-37, 39-40, 42-114 in CA 
84/06 
 
 
 
 
 
Other respondents: 
Ex-parte.  
 
Date of hearing 
: 
16.5.2013. 
***** 
 
JUDGMENT 
 
 
Iftikhar Muhammad Chaudhry, CJ._ These appeals by 
the leave of the Court have been filed against the common judgment 
dated 16.03.2005 passed by the High Court of Sindh at Karachi in 
Constitution Petitions No. D-739/1993 and D-754/1996.  
CAs 83-84/06 
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2. 
  
The facts necessary for disposal of the listed appeals are 
that appellant in the titled appeals, namely, Fauji Fertilizer Company 
Ltd. (successor of M/s Pak Saudi Fertilizer Company Ltd.) [hereinafter 
referred to as “the company”], is a company incorporated under the 
Companies Ordinance, 1984, and is engaged in the manufacturing and 
marketing of Urea Fertilizer. The company used to enter into contracts 
with separate independent contractors for the execution of work of 
bagging urea and connected activities like insertion, filling and 
stitching of bags as well as their loading. For separate periods M/s 
Shahbaz & Co.; M/s M.B.K. Jalbani (Pvt) Ltd.; M/s Workman 
Associates; M/s Mohammad Hussain & Co.; Abdul Majeed & Co. and 
M/s Technical Associates were engaged by the company. As per terms 
and conditions of the contracts, the contractors were to engage the 
workers and provide their services to the company. The workers’ 
wages were paid by the contractors. However, the contractors were 
remunerated on the basis of volume of urea handled. During the 
period from 1984 to 1986, when M/s Shahbaz & Co. was the bagging 
and loading contractor,  the employees of the contractor formed a 
union under the name and style of ‘Pak Saudi Fertilizers Ltd. Bagging 
and Loading Contractors Mazdoor Union’ [hereinafter referred to as 
“contractor’s union”], which was also declared a CBA by the Registrar 
of Trade Unions, Hyderabad. Previously, the union had used the office 
of ‘Pak Saudi Fertilizer Employees’ Union’ [hereinafter referred to as 
“employees’ union”] for affecting the settlement with regard to the 
terms and conditions of services of workmen employed by M/s 
Shahbaz & Co. After the registration of contractor’s union as CBA, the 
contractor entered into fresh settlement with it on 09.05.1985. In the 
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year 1989, the contractor’s union served the charter of demand on the 
management of the company and M/s M.B.K. Jalbani, the then 
contractor. However, the company approached the National Industrial 
Relations Commission [NIRC] by means of proceedings under section 
22A(8)(g) of the Industrial Relations Ordinance, 1969 [hereinafter 
referred to as “IRO 1969”] along with an application under regulation 
32(2C) of the National Industrial Relations Commission (Procedure & 
Functions) Regulations, 1973 [hereinafter referred to as “the 
regulation 1973”]. Thereafter, a settlement was affected between M/s 
M.B.K. Jalbani and the contractor’s union and the grievances of 
workers were redressed. Later on, M/s Workman Associates, the then 
contractor, also entered in to a settlement with the contractor’s union 
vide memorandum of settlement dated 07.10.1991. On 08.03.1992, 
the contract was awarded to M/s Workman & Co., which entered in to 
a settlement with the contractor’s union on 09.03.1992. On 
15.03.1992, the contractor’s union filed proceedings before NIRC 
against M/s Workman & Co as well as the company, alleging therein 
that the company was not justified in awarding the contract to one 
Muhammad Aslam, the Managing Partner of M/s Workman Associates; 
that the lock-out affected in relation to 112 workers (Respondents No. 
3 to 114 in Constitution Petition No. D-739/1993) employed by the 
Contractor were illegal; and that settlement dated 9.3.1992, whereby 
the wages/ benefits of the workers were reduced, was an attempt to 
circumvent the earlier settlement dated 7.10.1991, and was as such 
illegal. The learned Member NIRC, Karachi vide the order dated 
15.03.1992, inter alia, directed that the payments of wages continued 
to be made as per settlements dated 7.10.1991 and to lift the lock-out 
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of workers, if any. Initially, the said petition was filed against the 
company and M/s Workman Associates, however, M/s Workman and 
Company was also impleaded by means of an application under Order 
1 Rule 10, CPC. In their reply, the company denied the existence of a 
relationship of employer and employee between the company and the 
members of the contractor’s union on the ground that the members of 
the contractor’s union were the employee of the contractor and that 
there was no lock-out. Ultimately the Member NIRC, Karachi vide 
order dated 10.04.1992 concluded that the management of the 
company was not responsible for making payments of wages to the 
workers/members of the contractor’s union but rather, M/s Workman 
and Co. were liable to make such payments in accordance with 
settlement dated 09.03.1992 and that, prima facie, there was no proof 
of coercion in execution of the said settlement. Being aggrieved from 
the said order, the contractor’s union filed an appeal before the full 
bench of NIRC, Islamabad, wherein the company raised an objection 
with regards to the locus standi of the union to file the appeal, being 
the CBA in the establishment of M/s Shahbaz and Co.; it also objected 
that there was no relationship of employer and employee between the 
members of contractor’s union and the company; and that the order 
appealed against was an interim order. It was further alleged that as 
per the contract executed between the company and the contractors, 
the payment to the contractors would be made on the basis of per ton 
of bagging and loading of the urea and connected activities. However, 
the workers started resorting to slow down tactics in work due to 
which the contractor was not in a position to make fixed payments of 
wages to the workers, who also filed a case under Section 22A(8)(g) of 
CAs 83-84/06 
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IRO 1969 before the NIRC Bench, Karachi with a prayer to direct the 
members of the contractor’s union to call off their slowdown in work 
and restore normalcy to the production process. The Commission, vide 
order dated 30.04.1992, directed the workers to call off their 
slowdown. Against the said order the contractor’s union filed an appeal 
before the full bench of NIRC, wherein, M/s Workman and Co. claimed 
that the workers were in fact the employees of the company and not of 
the contractor. The learned full bench of NIRC, vide order dated 
03.03.1993, declared that the members of the contractor’s union were 
employees of the company and directed the management of the 
company to make payments to the workers. The case was, however, 
remanded to the single bench of NIRC at Karachi for determining the 
issue pertaining to the alleged lock-out of 112 workers. The company 
being aggrieved and dissatisfied with the said judgment challenged the 
same before the High Court of Sindh at Karachi by means of 
Constitution Petition No. D-739 of 1993 wherein the learned High 
Court, vide order dated 18.03.1993, passed a status quo order.  
3. 
  
In the mean time, members of the contractor’s union 
(respondents No. 3 to 114) filed separate applications under section 
25A of the IRO 1969 before the Labour Court VII, Sukkur, which were 
registered as applications No. 36/92 to 147/92. The grievance of the 
applicants/workers was that they were working in the factory premises 
of the company, involved in the manufacturing of urea and that their 
job was to clean the machines and perform other manual work, which 
was of a permanent nature, and that the entire work was done by 362 
workers, who were frisked/searched by the chowkidaars of the 
company, as such, for all intents and purposes they were the 
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employees of the company. It was further alleged by the workers that 
they were locked-out and that some of the office bearers of the union 
were kidnapped and their signatures were forcibly obtained on the 
contract/settlement dated 09.03.1992. The Labour Court, after 
recording of evidence and hearing the parties, allowed all the 
grievance applications vide its decision dated 24.04.1996. The 
company being aggrieved of the said order, preferred appeals under 
section 37(3) of IRO 1969 before the Sindh Labour Appellate Tribunal, 
Karachi, which were dismissed in limine by means of a common order, 
dated 16.05.1996. The company assailed the said order before the 
High Court of Sindh, Karachi, by means of Constitution Petition No.D-
754/1996. Both the petitions, namely, Constitution Petition No.D-
754/1996 and Constitution Petition No.D-739/1993 were heard 
together by the learned High Court and by means of impugned 
judgment dated 16.03.2005, the CP No.D-754/1996 was dismissed 
and accordingly the CP No.D-739/1993 stood dismissed as having 
become infructuous. The company assailed the said judgment before 
this Court by means of Civil Petitions for leave to appeal No.2103 and 
2104 of 2005 which were converted into Civil Appeals No. 83 and 84 of 
2006 as leave was granted on 26.01.2006. 
4. 
  
Mr. Khalid Anwar, learned Sr. ASC submitted on behalf of 
M/s Fauji Fertilizer Company Ltd. that the NIRC at the request of 
respondent union, vide interim order dated 14.03.1992, directed the 
company to continue paying the wages to the workers but the same 
was vacated on 30.04.1992, on the ground that, prima facie, the 
contractor was liable to make payments and not the company. Being 
aggrieved from the said order, the contractors’ union filed appeal 
CAs 83-84/06 
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before the full Bench of NIRC, which decided on 3.3.1993 declaring 
that the members of the contractors’ union were employees of the 
company, however, the case was remanded to the Single Bench. In 
the meanwhile, the workers/members of the contractor’s union made a 
switch in strategy and on 19.07.1992, approached the Labour Court 
through applications under Section 25A of IRO 1969 on the identical 
facts and the same cause of action. According to him, although the 
complaints were made by individual workers that all applications were 
filed through one Abdul Haq, the then Secretary General of 
contractor’s union. Thus, it is obvious that the contractor’s union 
played a key role in the same.  
5. 
  
The learned counsel further submitted that under section 
22A(11) and (12) of IRO 1969, once a matter is pending before the 
NIRC, the Labour Court has no jurisdiction in the said matter. 
According to him, the Labour Court in order dated 24.04.1996, pointed 
out that the workers had approached the NIRC and therefore, it should 
have refrained from assuming jurisdiction in the matter. There was no 
evidence to establish that a government owned factory would enter 
into a sham contract merely to deny workers their legitimate dues 
under the Labour Laws.  
6. 
  
Mr. Abid Hassan Minto, Sr. ASC, appearing on behalf of 
respondents No.3 to 114 submitted that the application under section 
22A(8)(g) read with section 15 of IRO 1969 and regulation 32(2C) of 
the Regulation 1973, was filed for the enforcement of its rights 
granted under sections 26(1) & (3) and 28 of the IRO 1969, as the 
company resorted to an illegal lock-out with mala fide intention to 
compel the office bearers of the contractor’s union to sign a settlement 
CAs 83-84/06 
8 
for reduction of wages and benefits available to the workers. The 
contractor’s union did not espouse the cause of removal from 
employment in terms of Standing Order No. 12(3) of the SO 
Ordinance, 1968. On the other hand, the respondents No. 3 to 114 
were removed orally by the company without assigning any reason, as 
required under the S.O. No.12(3) ibid, as such, they approached the 
Labour Court by means of grievance applications under section 25A of 
the IRO 1969 for reinstatement with full back benefits. According to 
the learned counsel, the civil proceedings before the NIRC filed by the 
contractor’s union was for the enforcement of its own rights, whereas, 
the grievance applications filed by the individual workers were for their 
reinstatement. 
Therefore, 
the 
Labour 
Court 
rightly 
assumed 
jurisdiction and the learned High Court confirmed the same.     
7. 
  
In this regard, it is to be noted that the proceedings filed 
before the NIRC were initiated by the contractor’s union against M/s 
Workman & Co as well as the company alleging therein that the 
company was not justified in awarding the contract to one Muhammad 
Aslam, the Managing Partner of M/s Workman Associates. The illegal 
lock-out by the company to the effect of 112 workers was also 
challenged through the same petition before the NIRC. Whereas the 
grievance applications under section 25A of the IRO 1969 were filed 
against the company with the following prayer:- 
“It is, therefore, prayed that this Honourable Court may be 
pleased to direct the respondents to reinstate the 
applicants with full back benefits with cost of this 
application.” 
CAs 83-84/06 
9 
The argument of learned counsel for the appellant that applications 
filed before NIRC as well as before the Labour Court are identical, 
therefore, the Labour Court could have not entertained the petition, 
does not appeal to mind. Though the facts of both the proceedings 
were similar due to having arisen from common circumstances but 
both the proceedings were initiated by separate entities i.e. the 
contractor’s union and the individual workers; and the prayers made in 
both the proceedings were absolutely different as mentioned above. 
Thus, it is held that both the proceedings were independent and the 
Labour Court had rightly assumed the jurisdiction in terms of section 
25A of the IRO 1969 to redress the grievance of the workers.  
 
8. 
  
Learned counsel for the appellants next submitted that the 
complaint before the NIRC was filed by members of the contractor’s 
union who were employees of the contractor and not of the company 
and therefore cannot claim to be employees of the company. The 
grievance of the workers in the said complaint was regarding the 
alleged lock-outs of 192 members, who were subsequently reduced to 
112. Although vague allegations were made, it was never specifically 
claimed that they were the employees of the company. Reference in 
this behalf has been made to the cases of Muhammad Sharif v. Punjab 
Labour appellate Tribunal (Civil Appeal No.39 of 1977), Souvenir 
Tobacco Co. Ltd. v. Najammuddin (PLD 1977 Karachi 250), Mian Munir 
Ahmad v. The State (1985 SCMR 257), Farid Ahmad v. Pakistan 
Burmah Shell Ltd. (1987 SCMR 1463), Nasir Jamal v. Pak Suzuki Motor 
Company Ltd. (2000 PLC 52), M/s Hinopak Motors Ltd. v. Chairman 
Labour Appellate Tribunal (2000 PLC 89) and Steel Authority Of India 
Ltd. v. Union of India (AIR 2001 SC 3527). 
CAs 83-84/06 
10 
9. 
 
The learned counsel next submitted that before the Labour 
Appellate Tribunal, the company specifically raised the objection that 
under the Labour Laws there can be only one CBA in one 
establishment. As the company has its own CBA, the CBA of the 
contractor cannot claim its members to be employees of the company. 
10. 
  
According to the learned counsel in the definition of 
employer provided in section 2(viii) of IRO 1969, there are three 
ingredients: firstly, the employer; secondly, the workman; and thirdly, 
that there must be a contract of employment. Learned counsel 
submitted that the phrase ‘directly or through a contractor’ provided in 
the definition of worker in section 2(xxviii) means not a contractor’s 
employee but the employees of an employer whether they are directly 
recruited or recruited through a contractor. Unless this interpretation is 
given, the definition of employer becomes meaningless. The concept of 
a contractor is separately established, in terms of which, if the 
contractor is carrying on work at some factory then those factory 
premises are also deemed to be his premises. Merely because the 
contractor’s workmen are working in the premises of the company, 
does not convert them into the workmen of the company as per the 
definition of “industrial establishment” mentioned in section 2(f)(iv) of 
the Industrial and Commercial Employment (Standing Orders) 
Ordinance 1968 [hereinafter referred to as “the SO Ordinance, 1968”].  
11. 
  
Learned counsel for the respondent-workers submitted 
that the workers were directly involved with the affairs of the 
company, as they used to stitching, filling and loading of urea bags, 
cleanings of machines, insertion of polythene into bags, etc., which are 
CAs 83-84/06 
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the jobs connected with the manufacturing process as defined under 
section 2(g) of the Factories Act, 1934. The land, building, machines, 
raw materials, finished goods, etc., were the properties owned, 
managed, controlled by the company through its occupiers/manager. 
The hire and fire authority including settlement of wages and benefits 
of the workers rest with the company and the so called contractors 
were engaged for their personal gain. The work of the respondent 
workers was supervised, controlled and looked after by the incharge of 
bagging and loading department and his subordinate staff/supervisors. 
He further contended that the contractors were changed from time to 
time but the workers including the respondents No.3-114 continued in 
the employment of the company. The jobs done by them namely 
cleaning of machines floor etc. were also connected with the 
manufacturing process within the premises of the factory. Therefore, 
the workers were the employees of the company. He relied upon the 
case of M/s Euro Ceramics Ltd. v. Registrar of Trade Union (1996 PLC 
45), M/s Dawood Cotton Mills v. Sindh Labour Appellate Tribunal 
(SBLR 2004 Sindh 614), M/s Basti Sugar Mills v. Ram Ujagar (AIR 
1964 SC 355) and Hussainbhai Calicut v. Alath Factory (AIR 1978 SC 
1410).  
12. 
 
In the first instance it would be appropriate to look at the 
definitions of “employer”, “worker” and “establishment” provided in 
various statutes. As per the definition in section 2(viii) of IRO 1969, 
“employer” in relation to an establishment, means any person or body 
of persons, whether incorporated or not, who or which employs 
workmen in the establishment under a contract of employment. This 
definition of employer has to be read in juxtaposition with the 
CAs 83-84/06 
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definition of “worker” provided in section 2(xxviii) which provides that 
worker and workman means any person not falling within the 
definition of employer who is employed in an establishment or industry 
for hire or reward either directly or through a contractor whether the 
terms of employment be express or implied. As per this definition, the 
phrase ‘directly or through a contractor’ means employees of an 
employer whether they are directly recruited or recruited through a 
contractor. The word “establishment” has been defined in section 2(ix) 
to mean any office, firm, industrial unit, undertaking, shop or premises 
in which workmen are employed for the purpose of carrying on any 
industry. Reference may also be made to section 2(c) of SO 
Ordinance, 1968 which provides that ‘employer’ means the owner of 
industrial or commercial establishment to which [the said] Ordinance 
applies. Section 2(f)(iv) ibid, inter alia, provides that ‘industrial 
establishment’ means the establishment of a contractor who, directly 
or indirectly, employs workmen in connection with the execution of a 
contract to which he is a party, and includes, the premises in which, or 
the site at which, any process connected with such execution is carried 
on. The learned High Court in the impugned judgment had also 
referred to section 2(h) of the Factory Act, 1934, which provides that 
“worker” means a person employed directly or through an agency 
whether for wages or not, in any manufacturing process, or in cleaning 
any part of the machinery or premises used for a manufacturing 
process, or in any other kind of work whatsoever, incidental to connect 
with the subject of the manufacturing process.  
13. 
 
At this juncture, it would be appropriate to have a glance 
at the case-law referred to by the learned counsel for the appellant. In 
CAs 83-84/06 
13 
the case of Souvenir Tobacco Co. Ltd. v. Najammuddin (PLD 1977 
Karachi 250) the employees of Canteen Managing Committee were 
declared not to be the employees of the company on the ground that 
according to the Karachi Factories Canteen Rules, 1953 read with the 
contents of the settlement, the affairs of the canteen of the company 
were directly under the control and the management of the Canteen 
Managing Committee and it was held that the application for 
re-instatement should have been filed against the said Committee and 
not against the company. In the case of Mian Munir Ahmad v. The 
State (1985 SCMR 257) the company used to run a beverage bottling 
at their factory and for the manufacturing of its product (Pepsi Cola) 
employed its own workers, who were on the pay-roll of the Factory. 
But certain other works were entrusted to contractors who employ 
their own labour. During the season in question the contract of loading 
and unloading the material in the Factory was awarded by the 
company to one Abdul Hamid Contractor, who had employed his own 
labour for the said work, who had nothing to do with the company, 
directly or indirectly. The employees of the contractor filed criminal 
complaints against the Managing Director of the company (appellant 
therein). The appellant approached the High Court for quashment of 
proceedings but the petition was dismissed on the ground that the 
High Court had no jurisdiction to exercise its inherent powers under 
section 561A, Cr.P.C., to quash proceedings pending before a labour 
Court as the same was not a Court subordinate to the High Court. The 
matter came to this court where the question for consideration was 
that whether the High Court had no jurisdiction under section 561-A, 
Cr.P.C. in respect of the proceedings pending before the Labour Court, 
CAs 83-84/06 
14 
which was dealing with the case ‘in its capacity as a Section 30 
Magistrate’. A 3-Member Bench of this Court allowed the appeal and 
quashed all the criminal complaints. It was further observed that the 
contractor had employed its own labour they were not on the pay-roll 
of the Factory. The management of the Factory was not even aware of 
the number of the workers employed by the contractor or about the 
terms and conditions of their appointment or service. As such the 
Factory Management was not required to issue them any attendance 
tickets under the relevant law, i.e. section 2 of Schedule 2(g) of the 
W.P. Standing Orders Ordinance. In the case of Farid Ahmad v. 
Pakistan Burmah Shell Ltd. (1987 SCMR 1463) the respondent 
company owned a number of petrol pumps and stations in Karachi, 
most of which were run by dealers appointed by the company, 
whereas, some others were run and managed by contractors. 
Appellant, the employee of the contractor, was terminated by the then 
contractor. The said termination order was challenged by the appellant 
in the Labour Court through a Grievance Petition under section 25A of 
the IRO, but the same was dismissed on the ground that there was no 
privy of contract between him and the company. Appeal filed by him 
before the Labour Court was accepted and he was ordered to be 
reinstated. The said order, though was complied with by the company, 
but was challenged before the High Court through a writ petition. The 
writ petition was allowed observing, inter alia, that the appellant was 
not an employee of the respondent company. In spite of the above 
judgment the appellant continued to work at the petrol pump. 
Afterwards, the then contractor, again terminated the services of the 
appellant. Thereupon, the appellant filed a criminal complaint before 
CAs 83-84/06 
15 
the NIRC against the company and its 3 officers u/s 53(1-A) of the 
IRO, complaining “unfair labour practice”. The matter came up before 
this Court when leave was granted to consider as to whether or not 
the appellant was an employee of company and whether it was open 
to the High Court to have decided this question in exercise of its 
constitutional jurisdiction as it involved a question of fact. A 5-member 
Bench of this Court, after relying upon the cases of Mian Munir Ahmad 
(ibid) and D.C. Works Limited v. State of Saurashtra (AIR 1957 SC 
269), on the ground that the contractor was not only the person who 
had employed the appellant but also the person who had the power of 
hiring and firing the employees, assigning works to be taken from 
them, etc., held that the appellant was not employees of the company 
but that of the contractor. In the case of Mehmood Hussain v. 
Presiding Officer, Punjab Labour Court (2012 SCMR 1539) a 2-member 
bench of this Court held that the question of relationship between the 
owners of company and the persons employed by its contractors, had 
already been decided by this Court in the case of Mian Munir Ahmad 
(supra) wherein it was held that such persons were not the employees 
of the company but those of the contractor who has hired them, 
therefore, the claim made by the respondent from the appellant was 
not tenable in law.  
 
The ratio of the above case-law is that the employees of the 
contractor shall not be the employees of the company if: - 
(a) 
they are under the control and management of the 
contractor and not that of the company; 
(b) 
they are not on the pay-roll of the company and the 
management of the company is not even aware of 
the number of the workers employed by the 
CAs 83-84/06 
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contractor or about the terms and conditions of their 
appointment or service; and 
(c) 
the contractor has the power of hiring and firing the 
employees, and assigns works to them and the 
company has no concern with it. 
14. 
 
Turning towards the case-law referred to by the learned 
counsel for the respondents, it is to be noted that in the case of M/s 
Euro Ceramics Ltd. v. Registrar of Trade Union (1996 PLC 45) the 
Balochistan High Court after considering the cases of Mian Munir 
Ahmad (supra) and Farid Ahmad (supra) held that in order to 
determine the status of the workers it is to be seen that whether the 
contractor engaged the workers for running of the affairs of the 
company or through those workers, it was carrying out another 
independent work which had no concern with the production, etc., of 
the company. It was further held that contractor had engaged the 
labour not for doing the job other than which was being carried out in 
the factory; and inference can also be drawn that a device was 
adopted to deprive the employees from their legitimate right to form a 
trade union. In the case of M/s Dawood Cotton Mills v. Sindh Labour 
Appellate Tribunal (SBLR 2004 Sindh 614) a Division Bench of the High 
Court of Sindh again considered the same question in the light of the 
law laid down in the cases of Mian Munir Ahmad (supra) and Farid 
Ahmad (supra). The Court distinguished the said judgments on the 
ground that the workers were required to work in the weaving 
department of the company which constituted one of the principle 
organs of a textile mill; the machines were belonged to the company 
and the raw material was also supplied by them; and the said section 
was controlled by the weaving master. The Court relied upon the case 
CAs 83-84/06 
17 
of Hussainbhai Calicut v. Alath Factory (AIR 1978 SC 1410) = (1978 
LLJ 397) to hold that the workers employed through contractor were 
the employees of the company. The said judgment of the High Court 
was assailed through civil petition for leave to appeal in the case of 
M/s Dawood Cotton Mills v. Sindh Labour Appellate Tribunal (Civil 
Petition No.309/2004, etc.) but this Court maintained the finding of 
the High Court. In the case of Pakistan Telecommunication Company 
Limited v. Muhammad Zahid (ICA No.164 of 2002) a Division Bench 
of the High Court,  while dealing with the question as to whether the 
employees engaged by the PTCL through a contractor (Telecom 
Foundation) were the employees of PTCL or not, it was held that it is 
trite law that whether employees are engaged directly or through a 
contractor, they would be deemed to be the employees of the 
establishment for whose benefit they perform functions. The said 
decision was upheld by the Supreme Court in the case of Pakistan 
Telecommunication Company Limited v. Muhammad Zahid (2010 
SCMR 253),  declaring the employees of Telecom Foundation to be 
employees of the PTCL.  
15. 
 
It would also be advantageous to consider cases on the 
issue in hand from the Indian jurisdiction. In the case of M/s Basti 
Sugar Mills v. Ram Ujagar (AIR 1964 SC 355) the Indian Supreme 
Court has held that the word ‘employed by the factory’ are wide 
enough to include workmen employed by the contractors of the 
factory. In the case of Silver Jubilee Tailoring House v. Chief Inspect 
(AIR 1974 SC 37) = [(1974) 3 SCC 498] certain employees claim the 
status of regular workers in a tailoring house “as employed in the 
establishment” within the meaning of Section 2(14) of the Shops and 
CAs 83-84/06 
18 
Establishments Act. On the question as to whether there existed 
employer-employee relationship between the workers and the 
Management, the Court pointed out that the control test, which is 
normally adopted for considering the said question is not an exclusive 
test or a decisive test. If the ultimate authority over the performance 
of the work of the employee rested in the employer so that he is 
subject to the supervision of the principal employer, would be 
sufficient. In the case of Hussainbhai, Calicut v. The Alath Factory 
Thezhilali Union, Kozhikode (AIR 1978 SC 1410) = [(1978) 4 SCC 257] 
the Indian Supreme Court laid the test for determining the workmen 
employed by the independent contractor to work in employer’s factory. 
The said issue relates to hiring workmen through contractors by an 
industry manufacturing ropes. The Supreme Court pointed out to the 
admitted fact that the work done by the contract labour was an 
integral part of the industry concerned and the workmen were broadly 
under the control of the Management. The relevant para therefrom 
reads as under: - 
“5. 
The true test may, with brevity, be indicated once 
again. Where a worker or group of workers labours to 
produce goods or services and these goods or services are 
for the business of another, that other is, in fact, the 
employer. He has economic control over the workers' 
subsistence, skill, and continued employment. If he, for 
any reason, chokes off, the worker is, virtually, laid off. 
The presence of intermediate contractors with whom alone 
the workers have immediate or direct relationship ex 
contract is of no consequence when, on lifting the veil or 
looking 
at 
the 
conspectus 
of 
factors 
governing 
employment, we discern the naked truth, though draped in 
different 
perfect 
paper 
arrangement, 
that 
the 
real 
employer 
is 
the 
Management, 
not 
the 
immediate 
contractor. Myriad devices, half-hidden in fold after fold of 
legal form depending on the degree of concealment 
needed, the type of industry, the local conditions and the 
like, may be resorted to when labour legislation casts 
welfare obligations on the real employer, based on Articles 
38, 39, 42, 43 and 43-A of the Constitution. The court 
CAs 83-84/06 
19 
must be astute to avoid mischief and achieve the purpose 
of the law and not be misled by the maya of legal 
appearances.” 
 
In the case of Catering Cleaners of Southern Railway v. Union of India 
(AIR 1987 SC 777) = [(1987) 1 SCC 700], on the issue of contract 
labour engaged for cleaning catering establishments and pantry cars in 
Southern Railway, the Indian Supreme Court pointed out that the work 
of cleaning catering establishments and pantry cars is necessary and 
incidental to the industry or the business of the Southern Railway; the 
employment was of perennial nature and that the work required 
employment of sufficient number of whole-time workmen. It was 
directed that those workmen, who were previously employed by the 
contractor on the same wages and conditions of work as were 
applicable to those engaged in similar work in Western Railway, be 
absorbed without waiting for the decision of the Central Government. 
In the case of Sankar Mukherjee v. Union of India (AIR 1990 SC 532) 
= [(1990) (Supp) SCC 668], the Indian Supreme Court considered the 
notification by the Government of West Bengal prohibiting the 
employment of contract labour in various departments including the 
job of loading and unloading of bricks from the wagons and trucks in 
Brick Department. The Court pointed out that the bricks handled by 
the Brick Department were used in furnaces of the company as 
refractory and incidental to the industry carried on by the company. 
Even though the petitioners therein were not doing the job of stacking 
the bricks, there was no denial or any averment or material to show 
that the job of loading and unloading of bricks was not incidental or 
alike to the stacking of the bricks; on the other hand, the workers 
performing those jobs which were of perennial nature, were to be 
CAs 83-84/06 
20 
treated alike. The workers doing the job of loading and unloading from 
the wagons and trucks in the Brick Department are to be treated on 
par with those who were doing the job of cleaning and stacking in the 
said Department. There was no reason as to why others doing the 
same job should be treated differently. In the case of Indian Overseas 
Bank v. I.O.B. Staff Canteen Workers’ Union (AIR 2000 SC 1508) = 
[(2000) 4 SCC 245] the Court held that no single or substantive test 
could be confined or concretized as a fixed formula of universal 
application in all class or category of cases. Although some common 
standards could be devised, the mere presence of one or more or their 
absence of the same cannot, by itself, be held to be decisive of the 
whole issue, since every case has to be decided on the peculiar 
aspects of a particular case. That being the position, in order to 
safeguard the welfare of the workmen, the veil may have to be pierced 
to get at the realities. In the case of Steel Authority Of India Ltd. V. 
Union of India (AIR 2001 SC 3527) the Court held that even in case of 
contract labour, there can be adjudication as to the regularization of 
the employment by the Industrial Court/Tribunal. If the contract is 
found to be not genuine, but a mere camouflage, the so called contract 
labour will have to be treated as employee of the principal employer, 
who shall be directed to regularize the services of the contract labour 
in the establishment concerned. In the case of Mishra Dhatu Nigam 
Ltd. v. M.Venkataiah (AIR 2003 SC 3124) = [(2003) 7 SCC 488] the 
Indian Supreme Court held that where in discharge of a statutory 
obligation of maintaining a canteen in an establishment the principal 
employer availed the services of a contractor, the contract labour 
would indeed be the employees of the principal employer and that 
CAs 83-84/06 
21 
such cases do not relate to or depend upon the abolition of contract 
labour. In the case of Ram Singh v. Union Territory, Chandigarh (AIR 
2004 SC 969) = [(2004) 1 SCC 126] the Court reiterated that in 
determining the relationship of employer and employee, even though 
‘control’ test is an important test, it is not the sole test. It was further 
observed that it is necessary to take a multiple pragmatic approach 
weighing up all the factors for and against the employment instead of 
going by the sole test of control. An “integration” test is one of the 
relevant tests. It is applied by examining whether the person was fully 
integrated into the employer’s concern or remained apart from and 
independent of it. The other factors which may be relevant are, who 
has the power to select and dismiss, to pay remuneration, deduct 
insurance contributions, organise the work, supply tools and materials 
and what are the “mutual obligations” between them. The Court 
further held that the mere fact of formal employment by an 
independent contractor will not relieve the master of liability where the 
servant is, in fact, in his employment. In that event, it may be held 
that an independent contractor is created or is operating as a 
subterfuge and the employee will be regarded as the servant of the 
principal employer. In the case of Workmen of Nilgiri Coop. Mkt. 
Society Ltd. V. State of T.N. ( AIR 2004 SC 1639) = [(2004) 3 SCC 
514] after referring to the case of Ram Singh (supra) the Court 
reiterated that the test of organization or of control and supervision 
are the only decisive test and different tests have to be applied in 
different facts and circumstances; ultimately all relevant facts have to 
be integrated in considering the said question. Relevant portion 
therefrom is reproduces hereinbelow: - 
CAs 83-84/06 
22 
“37. The control test and the organisation test, therefore, 
are not the only factors which can be said to be decisive. 
With a view to elicit the answer, the court is required to 
consider several factors which would have a bearing on the 
result: - 
(a) 
who is the appointing authority;  
(b) 
who is the paymaster;  
(c)  
who can dismiss;  
(d)  how long alternative service lasts;  
(e)  the extent of control and supervision;  
(f)  
the nature of the job e.g. whether it is professional 
or skilled work;  
(g)  nature of establishment;  
(h)  the right to reject.” 
 
16. 
  
The crux of the above case-law is that: - 
(a) 
the word ‘employed by the factory’ are wide enough 
to include workmen employed by the contractors of 
the company;  
(b) 
the employees of the contractor shall be the 
employees of the company if the contractor engaged 
the workers for running of the affairs of the company 
and not for some other independent work which has 
no concern with the production of the company;  
(c) 
if the employees are working in a department of the 
company which constituted one of the principle 
organs of the company, the machines belong to the 
company, the raw material is supplied by the 
company and the said department is controlled by 
the supervisors of the company, the employees of 
the contractor shall be the employees of the 
company; 
(d) 
the employees, engaged directly or through a 
contractor, would be deemed to be the employees 
of the company for whose benefit they perform 
functions;  
CAs 83-84/06 
23 
(e) 
even though ‘control’ test is an important test, it is 
not the sole test; a multiple pragmatic approach 
weighing up all the factors for and against the 
employment has to be adopted, including an 
“integration” test; and 
(f) 
if the contract is found to be not genuine and a 
device 
to 
deprive 
the 
employees 
from 
their 
legitimate rights/benefits, the so called contract 
employees will have to be treated as employee of 
the company. 
17.    
Normally, the relationship of employer and employee does 
not exist between a company and the workers employed by the 
Contractor; however, in the case where an employer retains or 
assumes control over the means and method by which the work of a 
Contractor is to be done, it may be said that the relationship of 
employer and employee exists between him and the employees of the 
contractor. Further, an employee who is involved in the running of the 
affairs of the company; under the direct supervision and control of the 
company; working within the premises of the company, involved 
directly or indirectly in the manufacturing process, shall be deemed to 
be employees of the company.  
18. 
   
In the instant case, the employees of the contractor were 
involved in running the affairs of the company such as filling and 
loading of urea bag as well as cleaning of machines and floors, 
therefore, for all intents and purposes, they are employees of the 
company through the contractor.  
19. 
  
As regards to the lock-out it was submitted by the learned 
counsel for the petitioner that as per definition of “lock-out” contained 
CAs 83-84/06 
24 
in section 2(xvi) of IRO 1969, the concept of lock-out only applies in 
relation to the employees of the company and not to the employees of 
the contractor.  
20.    
Section 2(xvi) ibid provides that ‘lock-out’ means the 
closing of a place of employment or part of such place or the 
suspension, wholly or partly, of work by an employer, or refusal, 
absolute or conditional, by an employer to continue to employ any 
number of workmen employed by him where such closing, suspension 
or refusal occurs in connection with an industrial dispute or is intended 
for the purpose of compelling workmen employed to accept certain 
terms and conditions of or affecting employment;  
21. 
  
In light of the above definition, we are in agreement with 
the learned counsel that the lock-out only applies to the employees of 
the company. However, as we have already declared that the 
respondents are employees of the company, therefore, the CBA of 
contractor’s union was rightly aggrieved from the said lock-out. Thus, 
the learned Labour Appellate Tribunal has rightly redressed the 
grievance of the respondent employees.  
22. 
The learned counsel further submitted that the Constitution 
Petition No. D-739/1993 was admitted to regular hearing and a stay 
was granted. However, the same was dismissed by a two-line order 
that it had become infructuous merely because the other petition 
namely CP No. D-754/1996 against the order passed by Labour 
Appellate Tribunal had been dismissed. He argued that this was a 
manifest error and the petition should have been decided on merits.  
CAs 83-84/06 
25 
23. 
  
It is to be noted that when the constitution petition arising 
out of the proceedings of Labour Court was dismissed, the main 
grievance of the employees was redressed as such the other 
constitution petition had become infructuous. 
24. 
  
Learned counsel for the appellant has also submitted that 
the Labour Court directed for reinstatement of respondents in service 
with full back benefits in terms of agreement/settlement dated 
31.01.1991 which was valid up to 27.01.1993, but according to him 
the said agreement was terminated on 22.02.1992, therefore, they are 
not entitled for back benefits after the said date. In this behalf it is to 
be noted that notwithstanding expiry of agreement between employer 
and employees, their relationship shall be governed under SO 
Ordinance, 1968, as they have attained status of permanent 
employees by the efflux of time. 
25. 
  
These are the reasons of our short order of even date, 
whereby the listed appeals were dismissed with costs.  
 
 
 
Chief Justice 
 
     Judge 
 
 
     Judge 
Islamabad, the 
16th May, 2013 
Nisar/* 
 
 
 
 
Approved For Reporting