Industrial Court Proper Forum To Decide Issues Regarding Contract Labour : Supreme Court

The Supreme Court observed that the Industrial Court established under the Industrial Disputes Act, 1947 is the proper forum for adjudication of the dispute concerning the employment and termination of employment of the contract labour.

“…the proper forum is the Industrial Court/Court for adjudicating issues concerning the employment and termination of employment of contract labour.”, observed a bench of Justices Pankaj Mithal and SVN Bhatti relying on the Constitution Bench judgment in Steel Authority of India Limited and others v. National Union Waterfront Workers and Others (2001) 7 SCC 1.

The Court affirmed the Bombay High Court's judgment, which had upheld the Labour Commissioner's decision to refer the dispute, concerning the alleged sham nature of the contract, to the Industrial Court for adjudication. It emphasized that the adjudication of the dispute between the parties, i.e., whether the contract between the management and the labour contractor is genuine or a sham, is a judicial function, which must be decided by the Industrial Court.

The case originated from a dispute involving 118 workers associated with the Aurangabad Mazdoor Union, who were engaged by the Appellant-M/s Premium Transmission through registered labour contractors. The Union alleged that the contract labour system was a "sham and camouflage" designed to deny workers permanent status and benefits. When their contracts were not renewed, the union directly approached the Conciliation Officer under the Industrial Disputes Act, 1947 (ID Act), without even serving the charter of demands to the management.

After conciliation failed, the Deputy Labour Commissioner referred the dispute to the Industrial Court in Aurangabad in January 2020. The management challenged this reference before the Bombay High Court, contending that no valid "industrial dispute" existed as the union had not first served a formal charter of demands directly upon the company. The High Court rejected this plea, prompting the management's appeal to the Supreme Court.

Dismissing the appeal, the judgment authored by Justice Bhatti rejected the contention about the serving of the charter of demand to the management before raising a dispute under the Act.

The Court held that the dispute could not be dismissed on a mere technicality. As the core issue involved the alleged sham or camouflaged nature of the contract, a matter incapable of resolution in conciliation proceedings, the reference to the Industrial Court for adjudication was entirely justified.

“…a workman working under a contract has to determine their remedies on discontinuation or termination before the Industrial Court.”, the court said.

Also From Judgment: Prior Written Demand Not Necessary For 'Industrial Dispute' To Exist; Apprehended Dispute Can Be Referred : Supreme Court

Cause Title: M/S PREMIUM TRANSMISSION PRIVATE LIMITED VERSUS THE STATE OF MAHARASHTRA AND OTHERS

Citation : 2026 LiveLaw (SC) 86

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