2026 LLR 156
CALCUTTA HIGH COURT
Hon'ble Ms. Shampa Dutt (Paul), J.
WPA No. 20373/2008, Dt/– 24-11-2025

Steel Authority of India Ltd., IISCO Steel Plant
v.
The State of West Bengal & Ors.

ABSORPTION – Sham and camouflage contract – Determinant of – A reference was made by the Government of West Bengal whereby it was stated that there was an industrial dispute between the petitioner and the workers of the contractor – The issue was whether the demand of absorption of the contractor's workers with the petitioner company is justified – The said reference has been challenged before the High Court – It was contended by the petitioner that there was no employer-employee relationship between the principal employer and the workers of the contractor – Held, for an industrial dispute to exist, there has to be contract of employment between the parties and a relationship of employer-employee must exist – The prima facie test to determine the relationship between master and servant is the existence of the right of the master to supervise and control the work done – It is important to be able to direct not only the work to be performed but also the manner in which it shall be done – The workmen of the contractor do not automatically become the employees of the principal employer – If the contractor defaults in providing any benefit that the contract labour is entitled to under the law, the principal employer will be liable – If the principal employer keeps control on contract labour, including granting them any leave or extending salary advance, then the contract between the contractor and principal employer is sham – The reference states that there exists and individual dispute between the principal employer and his contractual workers which has caused prejudice to the petitioner and is against the principle of natural justice – An issue with respect to employer-employee relationship have to be framed – When no such issue is framed, the reference suffers from material irregularity – The reference is arbitrary and irregular and is quashed and set aside – Writ petition is allowed. Paras 41 to 65

For Petitioner: Mr. Soumya Majumder, Sr. Advocate and Mr. Bandhu Brata Bhula, Advocate.

For Respondent (State): Mr. Tapan Kumar Mukherjee, Sr. Advocate and Mr. Somnath Naskar, Advocate.

For Respondent No. 5: Mr. Debasish Chattopadhyay, Mr. Tirthankar Basu and Mr. Suman Biswas, Advocates.

IMPORTANT POINTS

• For an industrial dispute to exist, there has to be contract of employment between the parties and a relationship of employer-employee must exist.
• The prima facie test to determine the relationship between master and servant is the existence of the right of the master to supervise and control the work done.
• The workmen of the contractor do not automatically become the employees of the principal employer.
• If the contractor defaults in providing any benefit that the contract labour is entitled to under the law, the principal employer will be liable.
• If the principal employer keeps control on contract labour, including granting them any leave or extending salary advance, then the contract between the contractor and principal employer is sham.

Note: This judgment is relevant even after the notification of the Labour Codes as general principles pertaining to sham and camouflage contract are not contingent upon the provisions of the Contract Labour (R&A) Act, 1970.

Judgment

Shampa Dutt (Paul), J.–1. The writ petition has been preferred challenging the order of reference dated 18-04-2005 issued by the respondent No. 2, Deputy Secretary to the Government of West Bengal, Labour Department.

2. The issue in the order of reference, is as follows:—

“........whereas an industrial dispute exists between Messrs Indian Iron & Steel Co. Limited, Burnpur, P.O.-Burnpur, Dist-Burdwan and their Contractors' workers represented by ABK Metal & Engineering Workers' Union. The issue of reference is as follows:—

“(1) Whether the demand for absorption of the Contractors' Workers as detailed Annexure ‘A' and ‘B' in Indian Iron & Steel Co. Ltd. Burnpur, justified?

(2) What relief, if any, are the workers entitled to?”

3. The petitioner's case is that the petitioner company is engaged in the production of Steel. For the purpose of execution of work and carrying on business activities, the company employs a large work force on its roll. Certain jobs of casual and intermittent nature are executed through contractors, selected on the basis of invitation of tenders. The contractors' workers are not employed by the petitioner company, but they are employed by the contractors, and contractors' workers have privity of contract with the contractors, who are their employers.

4. It is stated that supervision, control and administration over the nature and manner of execution of the contractual job is exercised by the contractors over their men, that is the contractors' workers and there is no proximate connection or relationship whatsoever between the petitioner company and the contractors' workers. The contractors' workers are therefore not the workmen of the industry of the petitioner company.

5. It is the case of the petitioner that the respondent No. 5, M/s. A.B.K. Metal and Engineering Workers Union is a Trade Union representing the workmen of the petitioner company at its factory and cannot represent the contractors workers.

6. A purported industrial dispute was raised by the respondent No. 5 with the Assistant Labour Commissioner, Government of West Bengal vide letter dated 29th January, 1996.

7. Ultimately the Government of West Bengal vide order dated 18-04-2005, referred the alleged dispute with regard to the absorption of contractors workers to the learned Ninth Industrial Tribunal for adjudication.

8. The said order of reference is challenged in the present case.

9. Written notes have been filed by both the parties, wherein the petitioner in their written notes have stated that:—

“...........the order of reference dated 18th April, 2005 (Page 20 of W/P) 14 mentions the purported dispute to be in existence “between M/s. IISCO Limited and Their Contractors' Workers represented by ..........”

Evidently the Government of West Bengal did not form any opinion that there was any dispute between IISCO and its workmen.

(a) The petitioner further states that the definition of “Industrial Dispute” under section 2(k) of the Industrial Disputes Act, 1947 postulates only dispute only between employers and workmen. The definition does not contemplate a dispute between the principal employer and the contractors' labourers. Thus on the face of it, the order of reference is bad.

(b) The effect of withdrawal of the delegated authority of the State Government was withdrawal of administrative powers. Admittedly reference is an Administrative Act and the moment such administrative power is withdrawn, the reference would become unworkable before an Industrial Tribunal constituted by the State Government.

(c) This would mean that the reference made by the Government of West Bengal would remain, but the Industrial Tribunal constituted by the Government of West Bengal (State) would lose its power to adjudicate the dispute. Reference is an Administrative Act, whereas proceeding of an Industrial Tribunal is a quasi -judicial function.”

This issue has already been decided by this Court vide order dated 18-08-2025.

10. The respondent No. 5, the answering respondent has countered the argument of the petitioner and stated that though the proceeding is still pending before the learned industrial tribunal, Durgapur, extensive evidence has been adduced on examination of witnesses, but admittedly the award is awaited in the said proceedings on the ground of pendency of this writ application.

11. It is further stated by the respondent No. 5, that an identical and similarly placed workmen had also raised an industrial dispute and the dispute being Case No. X-1/2005 was decided by the 9th Industrial Tribunal, Durgapur who passed an award on 04-09-2009 directing the Company to treat the said workmen under reference as the workmen of the management and identical pecuniary benefits and other services benefits at par with other workmen already admitted in the company's Roll was allowed with effect from the date of reference.

12. The award was challenged by the petitioner by way of a writ application, being WPA 20732 of 2009, which was dismissed on 17-01-2017, by the single bench by upholding the award passed by the learned tribunal.

13. The Division Bench in FMA No. 1369 of 2017 dismissed the appeal by an order dated 18-04-2019.

14. A review application preferred by the petitioner being RVW 123 of 2019 was also rejected by the Division Bench vide order dated 03-07-2019.

15. A Special Leave Petition being SLP (C) Nos. 26634-26635 of 2019 was filed by the petitioner company before the Hon'ble Supreme Court, but the Hon'ble Supreme Court has been pleased to dispose of the said Special Leave Petition on 07-02-2023.

16. The workmen being represented by the respondent No. 5 herein have claimed the same benefit stating that they stand on the same footing and pray that the Tribunal may be directed to dispose of the reference in accordance with law, on the writ application being dismissed.

17. On hearing the parties and considering the materials on record, it appears that the petitioner's argument at present, is two fold, one being that the reference which apparently has held that an industrial dispute exists between the petitioner and the Contractors' Workers Union is not an industrial dispute being not in accordance with law, as the same is not between the petitioner and its workers but has been considered for a reference as an industrial dispute between the petitioner and Contractors' workers, who admittedly do not have an employee/employer relationship as admittedly they are workers of the Contractors and secondly in view of the Notification dated 5th May, 2008, the delegated power being rescinded, the tribunal is no more vested with the power to decide the reference, as the proceedings is admittedly not complete (done), and consequently the said reference has lost its force under the law (not valid). (Decided vide order dated 18-08-2025).

18. Now, the writ petition is being considered to decide the legality of the reference as the writ petitioner has raised the issue “that the reference which apparently has held that an industrial dispute exists between the petitioner and the Contractors' Workers Union is not an industrial dispute being not in accordance with law, as the same is not between the petitioner and its workers but has been considered for a reference as an industrial dispute between the petitioner as a principal employer and Contractors' workers who admittedly do not have an employee/employer relationship as admittedly they are workers of the Contractors”.

19. The petitioner's argument on the said issue is as follows:—

(a) That the user of the expression in the recital to the Order of Reference clearly expounds that there was no material before the Government of West Bengal to form an opinion that any “industrial dispute” existed between the management of IISCO and their workmen.

(b) A dispute between the management as principal employer and the contractors' workers is not an “industrial dispute”.

(c) Section 2(k) of the I.D. Act, 1947 defines “Industrial dispute” as follows:—

“Industrial dispute” means any dispute or difference between employees and employers, or between employers and workmen, or between workman and workmen, which is connected with the employment or non-employment or the terms of employment or with the conditions of labour, of any person.”

(d) Clearly therefore, the definition clause does not encompass a dispute between the management and the contract labourers. The question of locus standi of the union to raise an “industrial dispute” comes into play at this stage.

(e) A trade union representing the direct workers of the industry does not have the representative character to espouse the cause of contract labourers.

(f) A reference to be complete, has to refer an “industrial dispute” between the management and the workmen since the State Government only had materials to form an opinion that the “industrial dispute” existed between the management and its contractors' workers represented by the trade union of direct workers of the industry, the basic ingredient of the definition of “industrial dispute” remains unfulfilled in this case. Had it been a reference of an “industrial dispute” between the management and its workmen with regard to the terms and conditions of service or of employment or of non-employment of the workmen of the industry, then the reference could have been a valid one.

(g) The meaning of “industrial dispute” has been explained in the judgment of the Hon'ble Supreme Court, Workmen Employed by Hindustan Lever Ltd . v. Hindustan Lever Limited , (1984) 4 SCC 392 (para 5). Since the workmen of the industry are not connected with the present dispute, therefore, the Order of Reference itself is not a valid one.

20. The petitioner has thus prayed for setting aside of the order of Reference.

21. The written notes of argument of respondent No. 5, M/s. A.B.K. Metal & Engineering Workers Union has been filed stating that:—

i. On an identical and similarly circumstanced some other 159 nos. of workmen also raised the same and identical issues under reference against the present Steel Authority of India Limited IISCO Steel Plant. The said 159 nos. of workmen raised similar claim or regularization and receipt of identical service benefit at per with the employees of the petitioner. That said dispute was also referred to the Industrial Dispute Tribunal vide Case No. X-I/2005 before the learned Judge 9th Industrial Tribunal Durgapur. That upon due adjudication the learned Tribunal was pleased to allow the case under reference on contest and an award was passed on 4-9-2009 directing the Company to treat the said workmen under reference as the workmen of the management and identical pecuniary benefits and other services benefits as per with other workmen already admitted in the company's Roll was allowed with effect from the date of reference.

ii. A writ application being WPA 20732 of 2009 was pleased to dismiss the writ petitioner by order dated 17-01-2017 by upholding the award passed by the learned Tribunal.

iii. FMA No. 1369 of 2017, the appeal was also dismissed by an order dated 18-4-2019.

iv. A Special Leave Petition being SLP (C) Nos. 26634-26635 of 2019 was filed by the petitioner company before the Hon'ble Supreme Court but the Hon'ble Supreme Court has been pleased to dispose of the said Special Leave Petition on 7-2-2023.

22. The judgment in Board of Trustees for the Syama Prasad Mookerjee Port v. Union of India & Ors ., 2024 SCC OnLine Cal 2759 has been relied upon.

23. The said judgment relates to a case where the workers were engaged by the company (herein KoPT) directly and not through contractors as in this case.

24. The respondents case is for regularization after being engaged temporarily against permanent vacant posts. The respondent No. 5 herein has filed an application being CAN 5708 of 2011, wherein they have prayed for modification of the order dated 10-9-2008 passed by the Hon'ble Justice Aniruddha Bose in W.P. No. 20373(W) of 2008 by directing the learned Tribunal to pass a final order since the proceeding has been completed.

25. The petitioner in the present case has categorically challenged the following part of the order of reference dated 18-04-2005:—

ORDER

“WHEREAS an industrial dispute exists between Messrs Indian Iron and Steel Co. Ltd. Burnpur, P.O. Burnpur, Dist. Burdwan and their Contractors' workers represented by ABK Metal & Engineering Workers' Union”.

26. It is submitted that the authority on being prima facie satisfied that “there existed “an industrial dispute” between Messers Indian Iron and Steel Co. Ltd. Burnpur, District-Burdwan and their contractors' workers represented by ABK Metal and Engineering Workers Union......” made the said reference.

27. It is submitted that the basis of the said reference being bad in law, the reference itself is bad in law, as admittedly IISCO herein is the principal employer and the union herein, who normally represents the direct workers of IISCO represents contractor workers herein, which it is argued is not permissible under the law.

28. The issues in the reference are:—

(a) Whether the demand for absorption of the Contractors' workers as detailed in Annexure ‘A' and ‘B' in Indian Iron and Steel Co. Ltd., Burnpur, justified?

(b) What relief, if any, are the workers entitled to?

29. It is the case of the petitioner that such a reference can be made only when there is an industrial dispute as per the Act and under no other circumstances.

30. Learned Senior counsel Mr. Majumder relying upon the judgment in Workmen Employed by Hindustan Lever Ltd. v. Hindustan Lever Limited , (1984) 4 SCC 392, submits that only a reference which is legally made by the appropriate Government can be adjudicated by the Tribunal on merits.

31. It is the case of the petitioner that in this case the reference was not legally made as there is no relationship of employer-employee between the parties and as such there is no industrial dispute in this case and as such the reference is bad in law.

32. The petitioners rely upon Para 4 of Workmen Employed (supra) wherein the Supreme Court held as follows:—

“4. Section 10(1) confers power on the appropriate Government to refer an existing or apprehended industrial dispute, amongst others, to the Industrial Tribunal for adjudication. The dispute therefore, which can be referred for adjudication of necessity, has to be an industrial dispute which would clothe the appropriate Government with power to make the reference, and the Industrial Tribunal to adjudicate it.”

33. The petitioner further states that:—

(a) That the user of the expression in the recital to the Order of Reference clearly expounds that there was no material before the Government of West Bengal to form an opinion that an “industrial dispute” existed between the management of IISCO and their workmen.

(b) A dispute between the management and the contractors' workers is not an “industrial dispute”.

34. The sole point of contention as raised by the petitioner herein is that:—

“A dispute between the management (Principal employer) and the Contractors workers is not an industrial dispute.” As the same is not covered under section 2(k) of the Industrial Disputes Act.”

35. It is the further contention of the petitioner that the workers under a contractor are not covered under the said provisions (definition) of the Act, not being a workman/workmen as defined.

36. Section 2(s) of Industrial Disputes Act, 1947 (“ID Act”) defines “workman” as:—

Any person (including an apprentice) employed in any industry to do any manual, unskilled, skilled, technical, operational, clerical or supervisory work, for hire or reward, terms of employment is express or implied and includes any such person who has been dismissed, discharged or retrenched in connection with, or as a consequence of dispute.

37. The Courts have interpreted this definition and have identified various determining factors to know whether a person is “workman” or not. The factors which should be considered are:—

(a) whether there is a Master-Servant relationship.

(b) when a person is performing various functions which overlap in their characteristics, the nature of main function for which the claimant is employed should be considered.

38. CONTRACT LABOUR

The term ‘contract labour' under section 2(b) of Contract Labour (Regulation and Abolition) Act, 1970 (“CLRA”) is defined as:—

“A workman shall be deemed to be employed as “contract labour” in or in connection with the work of an establishment where he is hired in or in connection with such work by or through a contractor, with or without the knowledge of the principal employer.”

Contract labour thus means that a workman who is hired in or in connection with the work of an establishment by or through a contractor. It is important to note that the word, ‘hire', as used in the Act, has a significant connotation and it is not equivalent to an employer-employee relationship, as there is no direct employment.

39. Scope of Work

A workman is deemed to have been employed as contract labour, where he is hired in, or in connection with a particular work of the principal employer. The determinative factor, here, is whether a workman was hired in or in connection with work of an establishment. Where a workman is “hired' specifically for the work of an establishment, his scope of work does not extend beyond the work of that establishment and he is considered to be a contract labour.

40. The test for establishing an employer-employee relationship as laid down by the Apex Court in Balwant Rai Saluja v. Air India Ltd. , MANU/SC/0732/2014, is complete administrative control, which is decided by several factors, including, among others:—

1. who appoints the workers,

2. who pays the salary remuneration,

3. who has the authority to dismiss,

4. who can take disciplinary action,

5. whether there is continuity of service, and

6. extent of control and supervision i.e., whether there exists complete control and supervision.

41. The first essential condition for a person to be a workman is that there must be a contract of employment between the parties and a relationship of employer-employee or master-servant must exist. Indian courts have ruled that the prima facie test to determine the relationship between master and servant is the existence of the right in the master to supervise and control the work done. It is important to be able to direct not only the work to be performed but also the manner in which it shall be done.

An employment contract also establishes an employer-employee relationship, and in the absence of which no person can claim to be a workman. Additionally, the employee must be paid some remuneration irrespective whether the terms of his employment are express or implied.

Large industrial operations increasingly use the services of an independent contractor who, in turn, supplies people to an enterprise. Where a contractor employs a workman to do the work which he contracted with a third person (a company), the workman of the contractor will not become the workman of the management.

The contractor is responsible for payment of remuneration to the employees and not the management. However, under Indian law, the contract workers are legally bound to the contractor, but if the contractor defaults in providing any benefits that a contract labour is entitled under the law, the principal employer is liable. The principal employer will be the company where the workers work. Contract labourers under the law are eligible to receive, from the contractor, benefits such as provident fund and employee state insurance etc. The terms of the contract between the contractor and the Company govern the employment of the contract labour. The triggers for creation of a potential industrial dispute for contract and temporary/casual employees may arise when there is: (i) a tendency/frequency to hire workers who are engaged in the activities that are contrary to any local notification prohibiting employment of contract labour, (ii) non-compliance with provisions of legislations which require employers to provide benefits to its employees including contract labour, and (iii) excessive control/check on the activities of contract labour. The Courts have held that if the principal employer keeps control on contract labour, including granting them leave or extending any salary advance, then the contract between the contractor and principal employer is a sham.

42. Difference between CONTRACT OF SERVICE (WORKMAN) & CONTRACT FOR SERVICE (CONTRACT LABOUR)

43. In the present case the issues in the reference relate only to the entitlement of the contractual workers for regularization and other reliefs to which (if) they are entitled to.

44. The grievance of the petitioner herein is exactly on the said issues framed on the presumption that an industrial dispute exists between the petitioner (admittedly) the principal employer and the contractual workers.

45. Mr. Majumder further states that the reference in this case leaves no scope for adjudication by the tribunal, as to whether there exists any employer-employee relationship between the principal employer (petitioner) and the contractual workers, as the same has already been decided/held by the appropriate authority/Government without any basis, thus causing severe prejudice to the petitioner, who submits that when it is an admitted fact that the petitioner is the principal employer and the persons represented are the contractual labourers/workers, there clearly does not exists any employer-employee relationship between them and as such the recital of the reference on the basis of which the issues have been framed being not in accordance with law, the reference as a whole is liable to be quashed and set aside.

46. Now, it appears to this Court that in such situations and circumstances, the proper procedure for the appropriate Government would have been to also frame an additional issue as to “whether there exists any employer-employee relationship with the contractual workers working under a contractor in the premises of the petitioner” (As in WPA 28424 of 2024, Indian Institute of Management, Calcutta (IIMC) v. Union of India and Others on 17-02-2025, Calcutta High Court).

47. In the present case there being no such issue, and the (recital) to the reference stating that “there exists an individual dispute” between a principal employer and its contractual workers, being not in accordance with law has prima facie caused prejudice to the petitioner, being against the principle of natural justice and also an abuse of the process of law.

48. The Supreme Court in Cipla Ltd . v. Maharashtra General Kamgar Union & Ors ., AIR 2001 SC 1165, decided on 21 February, 2001, held:—

“.............in cases arising under section 33C(2) of the Industrial Disputes Act the scope, though very limited, certain incidental questions can be gone into like a claim for special allowance for operating adding machine which may not be based on the Sastry Award made under the provisions of Chapter V-A. The learned counsel pointed out that in the event we were to hold that it is only in clear cases or undisputed cases the labour court or the industrial tribunal under the Act can examine the complaints made thereunder, the whole provision would be rendered otiose and in each of those cases provisions of the Bombay Industrial Relations Act, 1946 or the Industrial Disputes Act will have to be invoked. We are afraid that this argument cannot be sustained for the fact that even in respect of claims arising under section 33C(2) appropriate dispute can be raised in terms of section 10 of the Industrial Disputes Act and that has not been the position in the present case. Nor can we say that even in cases where employer-employee relationship is undisputed or indisputably referring to the history of relationship between the parties, dispute can be settled and not in a case of the present nature where it is clear that the workmen are working under a contract. But it is only a veil and that will have to be lifted to establish the relationship between the parties. That exercise, we are afraid, can also be done by the industrial tribunal under the Bombay Industrial Relations Act, 1946 or under the Industrial Disputes Act. Therefore, we are afraid that the contention advanced very ably by Shri Singhvi on behalf of the respondents cannot be accepted. Therefore, we hold that the High Court went far beyond the scope of the provisions of the Act and did not correctly understand the decisions of this Court in Gujarat Electricity Board, Thermal Power Station, Gujarat v. Hind Mazdoor Sabha (supra) and General Labour Union (Red Flag), Bombay v. Ahmedabad Mfg. & Calico Printing Co. Ltd & Ors . (supra). The correct interpretation of these decisions will lead to the result, which we have stated in the course of this order In the view we have taken on the question of jurisdiction of the Labour Court under the Act, the decision given by the High Court on other questions need not be considered..........”.

49. In Vividh Kamgar Sabha v. Kalyani Steels Ltd. & Anr. , AIR 2001 SC 1534, decided on 9 January, 2001, in a similar case the Supreme Court held:—

“If there is a dispute as to whether the employees are employees of the company then that dispute must first be resolved by raising a dispute before the appropriate forum.”

The appropriate forum herein being under the Industrial Disputes Act.

50. In a case similar to the present case, the Supreme Court in Balwant Rai Saluja & Anr. Etc. Etc. v. Air India Ltd. & Ors. , (2014) 9 SCC 407, decided on 25 August, 2014, held:—

“.........The present dispute finds origin in an industrial dispute which arose between the Appellants-workmen herein of the statutory canteen and Respondent No. 1 – herein. The said industrial dispute was referred by the Central Government, by its order dated 23-10-1996 to the Central Government Industrial Tribunal-cum-Labour Court (for short “the CGIT”). The question referred was whether the workmen as employed by Respondent No. 3 – herein, to provide canteen services at the establishment of Respondent No. 1-herein, could be treated as deemed employees of the said Respondent No. 1............”

51. The said judgments are in support of an issue if raised, as to whether there exists an employer-employee between the parties, and this in itself being an industrial dispute is subject to adjudication by the tribunal.

52. But when such a relationship is in dispute and no such issue is framed in a reference, the reference clearly suffers from material irregularity and is liable to be quashed and set aside, for the ends of justice, there being clearly an abuse of power/process of law.

53. The contention of the respondent No. 5, who relies upon the an award dated 4-9-2009 passed in case No. X-1/2005, by the 9th Industrial tribunal, Durgapur, order dated 17-01-2017 passed by the Hon'ble Single Bench in WPA 20732 of 2009, order dated 18-4-2019 passed in FMA 1369 of 2017 and order dated 7-2-2023 in SLP (C) Nos. 26634-26635 of 2019), wherein the issue was identical and similarly circumstanced, between the petitioners herein and other workmen similarly placed is not applicable in the present case as the issue raised by the petitioner in the present writ application was not raised/or framed and thus neither considered nor decided in the said proceedings.

54. In the present case, it appears that the recital to the reference made is arbitrary and there is no material or basis for such presumption, that there was already an employer/employee relationship between the principal employer and the contractor workers, more so when the said relationship has not only been challenged but clearly denied by the petitioners (principal employers).

55. As such, without there being an issue in the reference/in respect of the said dispute, the issues already framed in this case cannot be adjudicated as these issues are directly connected to the issues not framed/raised as held herein.

56. Section 10(1) of the Industrial Disputes Act lays down the Government's role to make a reference and while doing so can decide the merits of a dispute as the power is an administrative one, not judicial.

57. In Telco Convoy Drivers Mazdoor Sangh and Ors . v. State of Bihar and Ors ., (1989) 4 TMI 342, the Supreme Court held that though the Government is entitled to form an opinion as to whether an industrial dispute “exists or is apprehended”, but it is not entitled to adjudicate the dispute itself on its merits. The question whether the person raising the dispute was a workman or not cannot be decided by the Government under section 10(1) of the Act. This dispute is required to be adjudicated by the competent Labour Court after its reference.

58. So in this case, the Government could not have held that there existed an industrial dispute between the parties (principal employer and contractual workers), without framing another issue, when the petitioner claims that there is no employer-employee relationship between the parties.

59. That being the principal issue, the other issues made/raised/framed under reference can have no force as the issues under reference are dependent on the principal issue.

60. Another issue has been raised by Mr. Majumder, questioning as to how the respondent union being a labour organization associated with IISCO limited, Burnpur (Principal employer) and represents its direct workers is now representing the contractor workers who are admittedly not the direct employees of IISCO (principal employer) but are engaged through contractors.

61. This is another important issue which is also to be considered by the authority under the appropriate government, if a fresh reference is made.

62. Thus the reference being No case No. X-1/2005 dated 18-4-2005 in the present case being arbitrary and irregular is quashed and set aside.

63. The appropriate government is at liberty to make a fresh reference as per the observations in this judgment.

64. It is clarified that vide order dated 18-08-2025, this Court decided the validity of the reference in respect of its existence under the law (being in force) as on date and not the legality of the reference, which has been decided vide this judgment.

65. WPA 20373 of 2008 is allowed.

66. All connected application, if any, stands disposed of.

67. Interim order, if any, stands vacated.

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