Supreme Court Upholds Reference Of Contract-Labour Dispute To Industrial Court But Sets Aside Interim Reinstatement Order

A bench of Justices Pankaj Mithal and S.V.N. Bhatti heard appeals by M/s Premium Transmission Pvt. Ltd. challenging orders that a labour dispute be referred to the Industrial Court, Aurangabad, and interim directions by the Industrial Court and the Bombay High Court directing continuation of work and payment of wages to contract labour. The core questions were whether a union must first serve a charter of demands on the employer before invoking conciliation under Section 12 of the Industrial Disputes Act, 1947 (ID Act), whether the contracts were sham or genuine, and whether interim relief under Section 33 of the ID Act could be granted to contract workmen pending adjudication.

The Court upheld the reference to the Industrial Court and directed focused adjudication, but in a separate, tagged appeal it allowed the management’s challenge to interim orders directing reinstatement and wages. The Court held that conciliation and a consequent reference were not vitiated merely because the Union had not first served a written demand on the employer, observing that “a written demand is not a sine qua non for an industrial dispute” and that Section 10 permits referral where a dispute “exists or is apprehended.” The Court, in its reasoning, observed: “The power to refer an 'apprehended' dispute is the statutory application of the old adage 'a stitch in time saves nine'. It enables the State to intervene before the industrial peace is shattered. Consequently, permitting Preliminary Objections to stall this urgent process negates the preventive intent of the statute, converting a mechanism of immediate relief into an engine of delay. The appropriate Government, in its armchair, while referring an Industrial Dispute for resolution, keeps in its perspective industrial peace and prosperity, to enable workers to work out their just and economic demands and avoid strikes and lockouts. The administrative decision merely looks at an Industrial Dispute or an apprehended Industrial Dispute. The merit or otherwise of the dispute is for the adjudicatory body to decide.” The Court further quoted the maxim “Ubi jus ibi remedium, i.e., where there is a right, there is a remedy in law,” to underline that reference provided a forum for adjudication.

Background The dispute arose when members of Aurangabad Mazdoor Union — working with the appellant’s factory through registered contractors — alleged that the labour contracts were “sham and bogus” and sought their absorption on the employer’s muster roll and other reliefs. The Union filed a representation before the Conciliation Officer on 11.06.2019; the Conciliation Officer admitted the matter for conciliation, issued notices and, after conciliation failed, submitted a failure report on 22.01.2020. The Deputy Labour Commissioner referred the matter to the Industrial Court on 28.01.2020 under Section 10 of the ID Act. The appellant challenged the admission, the failure report and the reference in writ proceedings, contending that no prior demand had been served on the employer and that the Conciliation Officer failed to verify locus standi and the identity of the alleged workmen. The Union countered that approaching the Conciliation Officer was permissible in cases of apprehended dispute and that direct service of a demand on the employer could lead to victimisation; it relied on Shambu Nath Goyal and SAIL jurisprudence distinguishing cases where contracts were found to be sham.

The Supreme Court reviewed authorities including DP Maheshwari, Shambu Nath Goyal, Sindhu Resettlement, Prabhakar, SAIL and Cipla, and held that Section 12 did not mandate a prior written demand as a pre-condition in every case and that the appropriate Government could refer an “apprehended” dispute. Applying the constitution bench decision in Steel Authority of India Ltd. (SAIL), the Court emphasised that contested questions of fact — whether a contract was sham or whether the principal employer exercised control making the workers de facto employees — were for the Industrial Court to determine. Accordingly, in the appeal arising out of SLP (C) No. 9970 of 2023 the Court dismissed the management’s challenge, directed the Industrial Court to frame two issues — (i) whether the contracts were sham and nominal and (ii) whether the management was the principal employer — and to dispose of Reference (IT) No. 1 of 2021 preferably within four months. In the companion appeal arising from SLP (C) No. 12192 of 2023, the Court held that interim orders of the Industrial Court and High Court directing continuation of work and payment of wages were unsustainable and set them aside, while granting liberty to the workmen to seek interim protection before the Industrial Court in accordance with SAIL principles.

Case Details: Case No.: Civil Appeal arising out of S.L.P. (C) No. 9970 of 2023 and Civil Appeal arising out of S.L.P. (C) No. 12192 of 2023 Case Title: M/s Premium Transmission Private Limited v. The State of Maharashtra & Others; M/s Premium Transmission Private Limited v. Kishan Subhash Rathod & Others Appearances: For the Petitioner(s): Mr. C.U. Singh, Senior Advocate (for M/s Premium Transmission Pvt. Ltd.) For the Respondent(s): Mr. Sandeep Sudhakar Deshmukh, Advocate (for Aurangabad Mazdoor Union); Shri B.H. Marlapalle, Senior Advocate (for contractor-respondents)

The appeals were disposed of on January 27, 2026; no costs were awarded and pending applications were disposed of.