Workmen Employed Through Registered Contractor Not Left Without Protection: Supreme Court Reiterates SAIL Safeguards
Legal framework ensures that they are not left without statutory safeguards
Justice Pankaj Mithal, Justice SVN Bhatti, Supreme Court
The Supreme Court has reiterated that workmen employed through a registered and genuine contractor are not left without protection, as the law already provides specific statutory safeguards for them, as laid down in Steel Authority of India Ltd. v. National Union Waterfront Workers (2001) 7 SCC 1 (SAIL). The Court emphasised that even where contract labour is not automatically absorbed as employees of the principal employer, the legal framework ensures welfare protection, wage security, and access to industrial adjudication.
The ruling thus clarifies that while the doctrine of automatic absorption stands rejected, protection of labour welfare rights remains central, and both the contractor and principal employer bear legal obligations to ensure that workmen are not deprived of statutory safeguards.
Justice Pankaj Mithal and Justice S.V.N. Bhatti observed, “At this stage, the interim prayer amounts to a virtual pre-judgment of the main dispute between the parties. In this litigation, the Management attempts to nip the dispute in the bud by raising preliminary objections and the Union is praying for relief which the union should agitate after the preliminary issues are decided in favour of the workmen. Both the parties are not conforming to the requirements of law in resolving a dispute of fact or dispute in law. Steel Authority of India and others. v. National Union Waterfront Workers and others, in the event of discontinuation or discharge, provides for a few measures for workmen working under a registered contractor…”.
Senior Advocate C. U. Singh appeared for the petitioner and Advocate Shrirang B. Varma appeared for the respondent.
The judgment came in a civil appeal arising from proceedings initiated by a trade union representing contract workers engaged at the appellant company’s factory through registered contractors. The Union alleged that the labour contracts were sham and camouflaged, intended to deny workers equal wages and service benefits, and sought regularisation and protection under the Industrial Disputes Act, 1947 (ID Act).
Pursuant to a failed conciliation, the dispute was referred to the Industrial Tribunal. During pendency of the complaint, the Tribunal allowed an interim application and directed the management to provide work to the concerned workmen and pay wages regularly.
The Bombay High Court declined to interfere with the interim order, leading the management to approach the Supreme Court.
Now before the Court, the management contended that workers engaged through licensed contractors cannot, at an interim stage, be treated as direct employees, and that Section 33 of the ID Act would apply only after the employer-employee relationship is established. It was argued that granting such relief virtually allowed the dispute itself.
The Union, on the other hand, submitted that the workers had been prevented from entering the factory during the pendency of proceedings and that the interim relief merely preserved status quo.
Allowing the appeal, the Supreme Court drew a clear distinction between the definitions of “workman” under the ID Act and the Contract Labour (Regulation and Abolition) Act, 1970 (CLRA). The Court held that the existence of a direct employer-employee relationship is a foundational question of fact, which can only be determined by the Industrial Tribunal after full adjudication.
The Bench noted that the SAIL judgment clearly sums up the measures available to workmen engaged under a registered contractor, particularly in situations of discontinuation or discharge. These include compliance with the Contract Labour (Regulation and Abolition) Act, 1970 provision of statutory welfare amenities, wage protection (with liability of the principal employer in case of default by the contractor), and the right of workers to raise an industrial dispute if the contract arrangement is alleged to be sham or a camouflage.
The Court underlined, “…the ID Act presupposes a direct privity of contract (master-servant relationship) between the management and the worker, whereas the CLRA definition strictly operates through the medium of a contractor, covering workers hired “by or through” a third party for the establishment’s work”.
The Bench emphasised that Section 33 of the ID Act is attracted only when the workman is employed by the management, and where such status itself is disputed, interim directions requiring the management to provide work and wages would amount to a virtual pre-judgment of the dispute.
“Determining whether a contract is ‘sham’ or ‘genuine’ involves disputed questions of fact (e.g., Who supervised the work? Who paid the wages? Who supplied the tools?). Therefore, only the Industrial Tribunal/Court can adjudicate the dispute. Writ Courts generally do not decide these disputed questions under Article 226 of the Constitution of India”, the Court said.
Setting aside the interim orders of the Industrial Tribunal and the High Court, the Supreme Court granted liberty to the workmen to seek appropriate interim measures in accordance with law, consistent with the principles laid down in SAIL. The Industrial Tribunal was left free to adjudicate the dispute on merits.
Cause Title: M/S Premium Transmission Pvt. Limited v. The State of Maharashtra & Ors. [Neutral Citation: 2026 INSC 87]
Petitioner: C. U. Singh, Sr. Adv., B. R. Kawre, Praveen Kumar Pandey, Atul Babasaheb Dakh, AOR, Advocates.
Respondent: Shrirang B. Varma, Siddharth Dharmadhikari, Aaditya Aniruddha Pande, AOR, Sandeep Sudhakar Deshmukh, AOR Nishant Sharma, Ankur S. Savadikar, Mayur P. Saavarkar, B H Marlapalle, Sr. Adv., Ajit Pravin Wagh, AOR Avinish Kr Saurabh, Advocates.
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