Contract labour abolition does not mean automatic absorption; genuine contract issues must be tested before the industrial forum.

A prohibition notification under Section 10(1) of the Contract Labour (Regulation and Abolition) Act, 1970 did not by itself create a right to automatic absorption of contract labour by the principal employer. The governing principle was that any claim to regularisation depends on the factual genuineness of the contract and whether the arrangement is a camouflage, matters for examination by the industrial adjudicatory forum. The Court also noted that prior directions for absorption had not been implemented, so the prospective operation of the earlier Constitution Bench ruling did not assist the workmen. In view of the unresolved factual disputes, recourse to conciliation and, if necessary, reference to the Industrial Tribunal was proper.

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Issues: Whether abolition of contract labour under Section 10(1) of the Contract Labour (Regulation and Abolition) Act, 1970 entitled the workmen to automatic absorption by the principal employer, and whether the High Court's direction to pursue conciliation and reference to the Industrial Tribunal called for interference.

Analysis: The notification prohibiting contract labour did not, by itself, create a right to automatic absorption. The controlling principle applied was that absorption is not automatic on abolition of contract labour; instead, the nature of the contract and the surrounding facts may have to be examined by the industrial forum, including whether the arrangement is genuine or merely a camouflage. The Court also noted that the earlier directions for absorption had not been given effect to, so the prospective operation of the prior Constitution Bench decision did not assist the workmen. Since disputed factual questions remained, the course adopted by the High Court in directing recourse to conciliation and, if necessary, adjudication was not shown to be erroneous.

Conclusion: No interference was called for, and the workmen were not entitled to automatic absorption on the basis of the prohibition notification alone.

Ratio Decidendi: Abolition of contract labour under Section 10(1) of the Contract Labour (Regulation and Abolition) Act, 1970 does not result in automatic absorption of the contract labour by the principal employer; any claim to regularisation depends on the factual genuineness of the contract and must be examined by the appropriate industrial adjudicatory forum.

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