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Issues: (i) Whether, in the absence of a prohibition notification under Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970, the Labour Court or writ court could direct abolition of contract labour or absorption of contract workers as regular employees; (ii) Whether the industrial adjudicator could examine the plea that the contract arrangement was sham or camouflage and whether the workmen could be permitted to take mutually destructive pleas.
Issue (i): Whether, in the absence of a prohibition notification under Section 10 of the Contract Labour (Regulation and Abolition) Act, 1970, the Labour Court or writ court could direct abolition of contract labour or absorption of contract workers as regular employees.
Analysis: The statutory scheme places regulation and abolition of contract labour within the exclusive domain of the appropriate Government under Section 10 of the 1970 Act. The industrial court cannot itself abolish contract labour or order absorption merely because the work is perennial. A writ court likewise cannot substitute its own view for the statutory decision-making process. The existence of a valid reference under the Industrial Disputes Act does not enlarge the forum's power to decide abolition, which depends upon the satisfaction of the conditions in Section 10(2) of the 1970 Act.
Conclusion: The Labour Court and the writ court had no jurisdiction to direct abolition of contract labour or absorption on that basis; the issue lay exclusively before the appropriate Government. The finding against the Appellant on this aspect was unsustainable.
Issue (ii): Whether the industrial adjudicator could examine the plea that the contract arrangement was sham or camouflage and whether the workmen could be permitted to take mutually destructive pleas.
Analysis: Where the claim is that the contractor was merely a ruse or camouflage, the industrial adjudicator can examine the genuineness of the contract because, if the arrangement is found fictitious, the workers are in substance direct employees of the principal employer. At the same time, the workers had consistently asserted before the statutory authorities that they were contract workers, and a contradictory plea that they were direct employees was impermissible. Admissions in pleadings cannot be displaced by later inconsistent amendments, and common law principles such as estoppel, waiver and acquiescence apply in industrial adjudication. The reference before the Labour Court also could not be expanded beyond its terms to decide matters not properly arising from the admitted stand.
Conclusion: The sham-or-camouflage issue could be examined only if properly raised within the confines of a valid industrial dispute, but the workmen could not be allowed to approbate and reprobate by advancing mutually destructive pleas. On the facts, the challenge to jurisdiction and the Labour Court's refusal to proceed were correct, and the contrary view of the High Court could not stand.
Final Conclusion: The impugned judgment was set aside and the appeal was allowed, leaving the statutory power of the appropriate Government under the contract labour legislation untouched.
Ratio Decidendi: Abolition of contract labour and issuance of a prohibition notification remain matters for the appropriate Government under the 1970 Act, while industrial adjudication is confined to deciding whether a contract is genuine or merely a sham so as to determine the real employer-employee relationship.
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