The Supreme Court has affirmed that the appropriate Government may refer an industrial dispute for adjudication even when no prior demand has been made to the employer, provided there is a reasonable apprehension of dispute. This landmark ruling reinforces the preventive intent of the Industrial Disputes Act, 1947, and curbs dilatory tactics by employers seeking to stifle worker grievances at the threshold.
Background & Facts
The Dispute
M/S Premium Transmission Private Limited, a manufacturer of transmission engineering products in Aurangabad, engaged contract labour through two registered contractors - OM Sai Manpower Services Ltd. and M/S Aurangabad Multi Services - under the Contract Labour (Abolition and Regulation) Act, 1970. The workers, employed through these contractors, were not directly on the company’s muster roll. In 2019, the Aurangabad Mazdoor Union filed a representation before the Conciliation Officer alleging that the contractual arrangement was a sham designed to deny workers benefits such as permanent status, equal wages, and job security. The Union demanded that the workers be absorbed as direct employees of the Management.
Procedural History
- 11.06.2019: Union filed representation directly with the Conciliation Officer without serving a prior demand on the Management.
- 19.06.2019: Conciliation Officer issued notice to the Management, initiating conciliation proceedings.
- 22.01.2020: Conciliation failed; failure report submitted to Deputy Labour Commissioner.
- 28.01.2020: Appropriate Government referred the dispute to the Industrial Court under Section 10(1) of the Industrial Disputes Act, 1947.
- 2020: Management filed Writ Petition No. 7158 of 2020 in the Bombay High Court challenging the reference as illegal for lack of prior demand.
- 2023: High Court dismissed the writ petition, upholding the validity of the reference.
- 2026: Civil Appeal filed in Supreme Court.
Relief Sought
The Management sought quashing of the reference order, conciliation admission, and failure report, arguing that no industrial dispute existed under Section 2(k) of the ID Act due to absence of a prior demand. The Union sought adjudication of whether the contract labour arrangement was a sham and whether the workers were de facto employees entitled to regularization.
The Legal Issue
The central question was whether Section 10(1) of the Industrial Disputes Act, 1947 permits the appropriate Government to refer an industrial dispute to an adjudicatory forum when no prior demand has been made to the employer, provided there is a reasonable apprehension of dispute.
Arguments Presented
For the Appellant/Petitioner
The Management relied on Sindhu Resettlement Corporation Ltd. v. Industrial Tribunal and Prabhakar v. Joint Director, Sericulture Department to argue that a formal demand followed by rejection is a sine qua non for an industrial dispute under Section 2(k). It contended that the Conciliation Officer acted ultra vires by admitting the dispute without verifying the locus standi of the Union or serving the demand on the Management. It further argued that the workers were contract labourers employed by independent contractors, and the Management had no employer-employee relationship with them. The preliminary objection, it claimed, was not a dilatory tactic but a jurisdictional challenge.
For the Respondent/State
The Union and the State relied on Shambu Nath Goyal v. Bank of Baroda and Vividh Kamgarh Sabha v. Kalyani to argue that an industrial dispute may arise from apprehended grievances, especially where workers fear termination or unfair labour practices. They contended that requiring a prior demand would expose workers to retaliatory dismissal, defeating the protective intent of the ID Act. The Union emphasized that the contracts were camouflaged to evade statutory obligations, and the Industrial Court was the proper forum to adjudicate the sham contract issue.
The Court's Analysis
The Court undertook a comprehensive review of statutory provisions, precedents, and the legislative intent behind the Industrial Disputes Act. It held that Section 2(k) defines an industrial dispute broadly as any "dispute or difference" connected with employment, without prescribing a mandatory pre-condition of prior demand. The Court distinguished Sindhu and Prabhakar on the ground that those cases involved belated claims after long lapses, not apprehended disputes.
"The term 'industrial dispute' is defined broadly as any 'dispute or difference' between employers and workmen connected with employment, non-employment, the terms of employment, or conditions of labour. The ID Act does not prescribe any specific manner in which a dispute must arise."
The Court emphasized that Section 10(1) empowers the appropriate Government to refer not only existing disputes but also apprehended ones, a provision designed to prevent industrial unrest. To interpret the statute as requiring prior demand would render the word "apprehended" otiose, violating the principle of statutory interpretation. The Court further held that the Conciliation Officer’s failure to follow the Conciliation Manual was not fatal, as the Manual is advisory, not mandatory.
The Court also examined the tripartite relationship under the Contract Labour Act and reaffirmed the principle from SAIL v. National Union Waterfront Workers: that whether a contract is genuine or sham is a question of fact for the Industrial Court, not a writ court. The Court rejected the Management’s attempt to use preliminary objections to derail the adjudicatory process, citing DP Maheshwari v. Delhi Administration to condemn such tactics as undermining industrial peace.
The Verdict
The Union won. The Supreme Court held that an apprehended industrial dispute justifies referral under Section 10(1) of the ID Act even without a prior demand to the employer. The reference by the appropriate Government was valid, and the Industrial Court must adjudicate whether the contract labour arrangement was a sham and whether the workers are de facto employees.
What This Means For Similar Cases
Conciliation Can Begin Without Prior Demand
- Practitioners must now argue that Section 10(1) permits preemptive intervention where workers fear termination or exploitation.
- Employers cannot invoke Sindhu or Prabhakar to dismiss conciliation proceedings merely because no demand was served.
- Conciliation Officers may initiate proceedings upon receipt of a credible representation alleging unfair labour practices or sham contracts.
Sham Contracts Are Adjudicated Only by Industrial Courts
- Writ petitions seeking direct regularization of contract labour without adjudication of the employer-employee relationship are unsustainable.
- Courts must defer to Industrial Courts to determine factual issues such as control, supervision, wage payment, and intent to evade labour laws.
- Employers cannot use technical objections to avoid substantive adjudication under the ID Act.
Preventive Referral Is a Statutory Imperative
- The Government’s power to refer apprehended disputes is not discretionary but a duty to maintain industrial peace.
- Delaying adjudication through preliminary objections violates the spirit of the ID Act and contravenes DP Maheshwari.
- Labour advocates should file applications under Section 33(1) for interim protection even before final adjudication, as the Court affirmed its applicability to pending disputes.
