The Supreme Court has reaffirmed 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 an apprehended dispute. This landmark ruling reinforces the preventive and remedial intent of the Industrial Disputes Act, 1947, and safeguards contract labourers from being denied access to justice through procedural technicalities.
Background & Facts
The Dispute
The dispute arose when a group of contract labourers, employed through registered contractors, alleged that their engagement was a sham designed to circumvent statutory benefits. The workers, engaged in core manufacturing operations at M/S Premium Transmission Private Limited, claimed they were de facto employees of the Management and sought regularisation, equal wages, and protection from termination. The Union representing them filed a representation before the Conciliation Officer under Section 12 of the Industrial Disputes Act (ID Act), without first serving a formal charter of demands on the Management.
Procedural History
- 11.06.2019: Union filed representation directly with the Conciliation Officer, alleging unfair labour practices and sham contracts.
- 19.06.2019: Management responded, denying employer-employee relationship and challenging jurisdiction.
- 22.01.2020: Conciliation Officer submitted a failure report.
- 28.01.2020: Deputy Labour Commissioner referred the dispute to the Industrial Court under Section 10(1) of the ID Act.
- 2020: Management filed Writ Petition No. 7158 of 2020 in the Bombay High Court, seeking quashing of the reference on grounds of non-compliance with pre-condition of prior demand.
- 2023: High Court dismissed the writ petition, upholding the validity of the reference.
- 2026: Civil Appeal filed in Supreme Court challenging the High Court’s decision.
Relief Sought
The Management sought to quash the reference order and stay proceedings before the Industrial Court, arguing that no industrial dispute existed due to absence of a prior demand. The Union sought adjudication of the sham contract allegation and protection of workers’ rights under Section 33-A of the ID Act.
The Legal Issue
The central question was whether a formal written demand to the employer is a mandatory precondition for the appropriate Government to refer an industrial dispute under Section 10(1) of the Industrial Disputes Act, 1947, particularly when the dispute is apprehended rather than fully crystallised.
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 an industrial dispute under Section 2(k) of the ID Act requires a prior demand by the workmen and its rejection by the employer. It contended that the Conciliation Officer’s admission of the dispute without serving notice on the Management violated the Conciliation Manual and rendered the reference illegal. It further argued that the workers were employed by registered contractors under the Contract Labour (Abolition and Regulation) Act, 1970, and thus could not be deemed employees of the Management without adjudication.
For the Respondent/State
The Union and the State relied on Shambu Nath Goyal v. Bank of Baroda and Cipla Ltd v. Maharashtra General Kamgar Union to assert that a formal written demand is not a sine qua non for an industrial dispute. They argued that the dispute was apprehended, not merely existing, and that serving a demand would have led to immediate termination of workers. The Union emphasized that the Management’s denial of employment status itself constituted a dispute under Section 2(k), and that the Government’s administrative power to refer an apprehended dispute under Section 10(1) must be preserved to prevent industrial unrest.
The Court's Analysis
The Court undertook a comprehensive review of statutory language, precedent, and legislative intent. It held that Section 10(1) of the ID Act empowers the appropriate Government to refer an industrial dispute “if it is of opinion that any industrial dispute exists or is apprehended.” The phrase “or is apprehended” is not surplusage but a critical safeguard designed to enable early intervention.
"The argument of management introduces words into the Section and, at the same time, ignores the second contingent circumstance, namely, where an Industrial Dispute is apprehended and renders otiose the words apprehended. Such an interpretation is clearly unavailable."
The Court distinguished Sindhu and Prabhakar on the ground that those cases involved belated claims after long lapses of time, whereas here, the dispute was contemporaneous and the workers faced imminent termination. It affirmed that the definition of “industrial dispute” under Section 2(k) is broad and encompasses any difference connected with employment, even if the employer denies the relationship. The denial of status by the Management, coupled with the Union’s allegations of sham contracts, constituted a real and substantial difference.
The Court further held that the Conciliation Manual is merely a guide and cannot override statutory provisions. The power to refer is administrative, not judicial, and courts must not interfere unless the Government acted mala fide or without any material. The Court also relied on Steel Authority of India Ltd. v. National Union Waterfront Workers to affirm that disputes regarding sham contracts and employer-employee relationships must be adjudicated by the Industrial Court, not preemptively dismissed by writ courts.
The Court rejected the notion that the absence of a prior demand negates jurisdiction, noting that such a requirement would defeat the preventive purpose of the ID Act and leave vulnerable workers without recourse.
The Verdict
The Union won. The Supreme Court held that the appropriate Government may refer an industrial dispute under Section 10(1) of the ID Act even without a prior demand to the employer, provided there is a reasonable basis to believe that an industrial dispute is apprehended. The reference order dated 28.01.2020 was upheld, and the Industrial Court was directed to proceed with adjudication.
What This Means For Similar Cases
Conciliation Can Be Initiated Without Prior Demand
- Practitioners must now argue that the absence of a prior demand does not invalidate conciliation proceedings under Section 12 of the ID Act.
- Labour courts and tribunals should not dismiss cases on this ground alone, particularly where workers allege fear of retaliation.
- The burden shifts to the employer to prove that the dispute was not apprehended or that the Government acted arbitrarily.
Sham Contract Allegations Must Be Adjudicated by Industrial Courts
- Allegations of sham contracts cannot be resolved by writ courts under Article 226; they require full-fledged adjudication under the ID Act.
- Employers cannot use preliminary objections to delay or derail proceedings where the nature of employment is contested.
- Industrial Courts must frame issues on: (i) whether the contract is sham, and (ii) whether the principal employer exercised control over the workers.
Preventive Intervention Is Statutorily Mandated
- The Government’s power to refer apprehended disputes is not discretionary but a statutory duty to preserve industrial peace.
- Delays caused by preliminary objections in writ courts will be viewed with disfavour, following DP Maheshwari v. Delhi Administration.
- Legal aid societies and unions should be encouraged to approach Conciliation Officers immediately upon signs of potential termination or wage suppression.
