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F.C.I, Bombay And Others v. Transport & Dock Workers Union And Others
Factual and Procedural Background
The opinion arises from a bunch of petitions in which counsel addressed the Court on (i) which authority qualifies as the “appropriate Government” under Section 2(1)(a) of the Contract Labour (Regulation and Abolition) Act, 1970, with reference also to Section 2(a) of the Industrial Disputes Act, 1947, and (ii) the consequence of a notification under Section 10 of the 1970 Act. The Court considered existing Supreme Court decisions and noted an apparent conflict in the case law, prompting a procedural order for reference to a larger Bench.
Legal Issues Presented
- Whether, for the purposes of Section 2(1)(a) of the Contract Labour (Regulation and Abolition) Act, 1970 (and by reference to Section 2(a) of the Industrial Disputes Act, 1947), the “appropriate Government” is the Central Government or the State Government.
- Whether contract labour are automatically absorbed as a consequence of a notification issued under Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970.
Arguments of the Parties
Petitioners' Arguments
- The petitioners maintained that the “appropriate Government” is the Central Government under Section 2(1)(a) of the 1970 Act.
Respondents' Arguments
- The respondents contended that the “appropriate Government” is the State Government, not the Central Government.
Other Submissions Noted
- The Court noted that the question of automatic absorption of contract labour upon a Section 10 notification was also canvassed as an important issue.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Hindustan Aeronautics Ltd. v. Workmen (1975) 4 SCC 679 | Under the Industrial Disputes Act, the “appropriate Government” was held to be the State Government even though the company was wholly owned and controlled by the Central Government. | Treated as part of the earlier line of authority supporting the State Government view; later identified (via Air India Statutory Corpn.) as having relied on Heavy Engg. without independent consideration. |
| Heavy Engg. Mazdoor Union v. State of Bihar (1969) 1 SCC 765 | Took the view (under the Industrial Disputes Act context) that the appropriate Government would be the State Government. | Noted as the foundation for later decisions; the Air India Statutory Corpn. extract quoted in the opinion criticizes it as a narrow interpretation and states it was based on concession, contributing to conflict. |
| Rashtriya Mill Mazdoor Sangh v. Model Mills 1984 Supp SCC 443 | Followed the view in Heavy Engg. and Hindustan Aeronautics on “appropriate Government.” | Cited to show the existence of multiple decisions adopting the State Government approach. |
| Workers' Union v. Food Corpn. of India (1985) 2 SCC 294 | Followed the earlier approach; the quoted extract from Air India Statutory Corpn. notes the decision proceeded on the premise that warehouses were within jurisdictions of different States, leading to the State Government conclusion. | Used (through the Air India Statutory Corpn. discussion) to illustrate the reasoning supporting the State Government view and to highlight subsequent disagreement by a later three-Judge Bench. |
| Air India Statutory Corpn. v. United Labour Union (1997) 9 SCC 377 | In paragraph 28 (quoted), the Bench expressed disagreement with the earlier foundation (particularly Heavy Engg.) and indicated a different constitutional perspective (including reference to Article 14) concerning interpretation of “appropriate Government.” | The Court relied on this decision to conclude that there is an “obvious conflict of opinion” with earlier three-Judge Bench decisions, necessitating resolution by a larger Bench. |
| R.D Shetty (1979) 3 SCC 489 | Mentioned in the quoted extract as part of the cases where Heavy Engg. formed the foundation; the extract notes that the need to examine the aspect in depth did not arise there, while referring to constitutional perspectives under Article 14. | Considered within the narrative identifying the competing interpretive approaches and the resulting conflict flagged for resolution. |
Court's Reasoning and Analysis
The Court identified that one major question argued was the meaning of “appropriate Government” under Section 2(1)(a) of the Contract Labour (Regulation and Abolition) Act, 1970, with reference also to the Industrial Disputes Act definition. It reviewed prior decisions where, in the Industrial Disputes Act context, benches had held the appropriate Government to be the State Government, including where the undertaking was wholly owned and controlled by the Central Government. The Court then noted that a later three-Judge Bench in Air India Statutory Corpn. expressly disagreed with the earlier approach (as reflected in the quoted paragraph 28), criticizing the foundation and reasoning in the earlier line of cases.
On this perusal, the Court concluded that there is an “obvious conflict of opinion” among Supreme Court decisions on the question of appropriate Government. Separately, it noted the importance of the question regarding automatic absorption of contract labour following a Section 10 notification. Given both the conflict and the importance of the issues, the Court determined that the matter should be placed before a larger Bench.
Holding and Implications
REFERRED TO LARGER BENCH: The Court directed that the case be laid before a larger Bench for hearing and ordered that the papers be placed before the Chief Justice for appropriate orders.
The direct effect is procedural: the merits of the questions (appropriate Government and automatic absorption upon a Section 10 notification) were not finally decided in this opinion. The implication is that the larger Bench is to resolve the identified conflict in Supreme Court authority; this order itself does not set out any new substantive rule beyond directing reference.
1. In this bunch of petitions one of the questions argued before us by the learned counsel for the parties relates to the definition of “appropriate Government” set out in Section 2(1)(a) of the Contract Labour (Regulation and Abolition) Act, 1970. While it is maintained by the petitioners that the appropriate Government would be the Central Government, the respondents contend that the State Government and not the Central Government would be the appropriate Government. Reference is also made to the definition of “appropriate Government” set out in Section 2(a) of the Industrial Disputes Act, 1947.
2. This question has been considered by this Court in a number of decisions. While considering the provisions of the Industrial Disputes Act, a three-Judge Bench in Hindustan Aeronautics Ltd. v. Workmen (1975) 4 SCC 679 held that the appropriate Government would be the State Government even though the Company was wholly owned and controlled by the Central Government. A two-Judge Bench in Heavy Engg. Mazdoor Union v. State of Bihar (1969) 1 SCC 765 also took the same view which was followed in Hindustan Aeronautics Ltd. (1975) 4 SCC 679 and Rashtriya Mill Mazdoor Sangh v. Model Mills 1984 Supp SCC 443 as also in Workers' Union v. Food Corpn. of India (1985) 2 SCC 294.
3. The question was again considered by a three-Judge Bench of this Court in Air India Statutory Corpn. v. United Labour Union (1997) 9 SCC 377. In para 28 of the decision it is stated as under:
“28. From this perspective and on deeper consideration, we are of the considered view that the two-Judge Bench in Heavy Engg. case (1969) 1 SCC 765 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 Aeronautics Ltd. (1975) 4 SCC 679, R.D Shetty (1979) 3 SCC 489 and Food Corpn. of India (1985) 2 SCC 294 cases the ratio of Heavy Engg. case (1969) 1 SCC 765 formed the foundation. In Hindustan Aeronautics Ltd. case (1975) 4 SCC 679 there was no independent consideration except repetition and approval of the ratio in Heavy Engg. case (1969) 1 SCC 765. It is to reiterate that Heavy Engg. case (1969) 1 SCC 765 is based on concession. In R.D Shetty case (1979) 3 SCC 489 the need to dwell in depth into this aspect did not arise but reference was made to the premise of private law interpretation which was relegated to and had given place to constitutional perspectives of Article 14 which is consistent with the view we have stated above. In Food Corpn. of India case (1985) 2 SCC 294 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.”
4. On a perusal of the above para it would be clear that although the cases, namely, Hindustan Aeronautics Ltd. (1975) 4 SCC 679, R.D Shetty (1979) 3 SCC 489 and Food Corpn. of India (1985) 2 SCC 294 mentioned above were decided by a three-Judge Bench, the Hon'ble Judges who constituted the three-Judge Bench in Air India Statutory Corpn. case (1997) 9 SCC 377 did not agree with the view already expressed earlier that the appropriate Government would be the State Government and thus there is an obvious conflict of opinion on this question which needs to be resolved.
5. The other question canvassed before us, namely, the question of automatic absorption of contract labour as a consequence of a notification issued under Section 10 of the Act is also an important question.
6. Having regard to the conflict of opinion as also the importance of the question raised before us, we direct that this case shall be laid before a larger Bench for hearing. Let the papers be laid before Hon'ble the Chief Justice for appropriate orders.
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