# Hindustan Aeronautics Ltd v. Hindustan Aeronautics Karmchari Sabha & Ors

- **Citation:** (2024) 11 ILRA 61
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2024-11-04
- **Case number:** Writ C No. 1000315 of 2012
- **Bench:** Subhash Vidyarthi
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/hindustan-aeronautics-ltd-v-hindustan-aeronautics-karmchari-sabha-ors-51127
- **Pages:** 33

## Headnote

C.S.C., Avinash Pandey, Dhruv Mathur,
Pranav Agarwal, Ravindra
Kr. Yadav,
Vasundhara Mathur, Virendra Misra

A.
Labour
Law
-
Contract
Labour
(Regulation and Abolition) Act, 1970 -
Section 10(1) - Industrial Disputes Act,
62 INDIAN LAW REPORTS ALLAHABAD SERIES
1947 - Sections 2(a) & 39 - Industrial
dispute
- Reference to Tribunal for
adjudication - Competence of St. Govt. -
Appropriate
authority
concerning
to
Hindustan
Aeronautics
Ltd.
(HAL)
-
Whether Central Govt. or St. Govt. -
Holding of shares in the company -
Relevance - Held, the Central Government
is the appropriate Government in respect
to the industrial disputes concerning HAL,
which is a Government Company in which
more than 51% shares are held by the
Central
Government
-
The
Central
Government having delegated its powers
to the St. Government u/s 39 of the
Central Act, the St. Government is legally
authorized to exercise the delegated
power in respect of HAL. (Para 77 and 78)
B. Labour Law - Industrial Disputes Act,
1947 - Sections 7-A & 39 - UP Industrial
Dispute
Act,
1947
-Section
4-B
-
Industrial
dispute
-
Competence
of
Government
to
refer
the
dispute
-
Whether Central Govt. u/s 7-A of the
Central Act or St. Govt. u/s 4-B of the St.
Act - Held, if the Central Government can
refer a dispute to an Industrial Tribunal
constituted by the St. Government, the
same can also be done by the St.
Government
in
exercise
of
powers
delegated by the Central Government u/s
39 of the Central Act - St. Government has
the power to refer the dispute concerning
HAL to the Industrial Tribunal constituted
u/s 4-B of the St. Act. (Para 80 and 81)
C. Labour Law - Industrial Disputes Act,
1947 - Section 10(4) - Industrial dispute
- Reference - Competence of Tribunal to
decide reference which was not referred
to it - Held, Tribunal was required to
examine
the
question
whether
the
workmen in question can be treated as
employees of HAL keeping in view their
long continuous service - Finding returned
by the Industrial Tribunal, that the
contract between HAL and the canteen
contractor was sham, was beyond the
scope of reference and it has been
recorded without jurisdiction. (Para 84
and 87)
D. Labour Law - Industrial Disputes Act,
1947 - Section 2(k) - Industrial dispute -
Employer - Competence of Tribunal to
decide dispute, which is not 'industrial
dispute' - The employees were working in
canteen and they were not performing any
duties relating to the principal business of
HAL, i.e., manufacturing parts of aircrafts
- Effect - Held, unless HAL is found to be
the employer of the workmen in question,
the dispute between the workmen and
HAL is not an 'industrial dispute' within
the meaning of the expression used in the
Industrial Disputes Act and the Tribunal
has no jurisdiction to adjudicate upon the
dispute between HAL and the workmen -
Tribunal has no jurisdiction to examine
the validity of the contract between HAL
and the canteen contractor and to record
a finding that the contract is sham. (Para
98, 99 and 112)
E. Labour Law - Industrial dispute - Back
wages - Entitlement - Right of employee
to claim against HAL, who is the principal
employer - Enforceability - Held, back
wages
are
payable
only
when
the
employees are illegally restrained from
working, although they are willing to
perform their duties - The employees
were employed by the canteen contractor
and HAL was merely their principal
employer. Therefore, the employees had
no
right
to
claim
reinSt.ment
and
regularization in HAL and they having
declined to perform the duties assigned by
HAL, had no right to claim any back
wages. (Para 117 and 118)
F. Labour Law - Industrial Disputes Act,
1947 - Sections 25-K & 25-N - Industrial
dispute - Retrenchment - Establishment
having
less
than
100
employees
-
Applicability of Section 25-N - Held,
requirement for attracting Section 25-N is
that not less than one hundred workmen
were employed in the establishment on an
average per working day for the preceding
twelve mon

## Text

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11 All. Hindustan Aeronautics Ltd. Vs. Hindustan Aeronautics Karmchari Sabha & Ors.
61
orders under Section 14 of the Act, 2002,
its execution should also be ensured and
after possession has actually been handed
over to the secured creditor, only then the
proceedings under Section 14 should be
consigned and treated as concluded, not
prior to it. It appears that after passing of
such orders, the District Magistrates or the
Chief
Judicial
Magistrates
leave
the
secured creditor to the mercy of the police
personnel, as if, it is the secured creditor
who has to get the order enforced through
the police, which is not the correct legal
position. In judgment dated 25.10.2024
rendered in Writ C No. 8867 of 2024, Bank
of Baroda Vs. State of U.P. and 8 others,
we have already held that there is no
requirement of issuing notice to the
Borrower in such proceedings under
Section 14. However, we must clarify that a
reasonable time say of at least 15 days
should be given to the occupant of the
secured asset to vacate the premises so that
he may shift his belongings.

5. In view thereof, the petitioner is
granted liberty to move an application
before the Chief Judicial Magistrate who
has passed the order on 13.09.2024, who
shall take cognizance for enforcement of
his orders in terms of the aforesaid
provisions, and then ensure its execution /
enforcement at the earliest, keeping in mind
the intent and object of the provision
contained in the Act, 2002 as the recent
judgment of this Court dated 25.10.2024
passed in Writ C No. 8867 of 2024, Bank
of Baroda Vs. State of U.P. and 8 others.

6. This order is being passed without
prejudice to the rights of the borrower who
has preferred an application under Section
17 of the Act, 2002 and the officer
aforesaid shall verify as to whether there is
any interim order in favour of the borrower
by the Debt Recovery Tribunal or not; and
thereafter, proceed to enforce his orders.
The Senior Registrar of this Court at
Lucknow shall communicate this order to
Chief Judicial Magistrate, Lucknow for
compliance.

7. We direct Shri Raj Bux Singh,
learned Additional Chief Standing Counsel
to communicate this order to the Chief
Secretary, U.P., for circulation amongst the
District Magistrates in the State of U.P..
Likewise, a copy of this order be also sent
to the Director, Judicial Training Research
Institute, Lucknow, U.P..

8. The writ petition is disposed of in
the aforesaid terms.
----------
(2024) 11 ILRA 61
ORIGINAL JURISDICTION
CIVIL SIDE
DATED: LUCKNOW 04.11.2024

BEFORE

THE HON'BLE SUBHASH VIDYARTHI, J.

Writ C No. 1000315 of 2012
With
Writ C No. 1000491 of 2012

Hindustan Aeronautics Ltd. ...Petitioner
Versus
Hindustan Aeronautics Karmchari Sabha &
Ors. ...Respondents

Counsel for the Petitioner:
P.K. Sinha

Counsel for the Respondents:
C.S.C., Avinash Pandey, Dhruv Mathur,
Pranav Agarwal, Ravindra
Kr. Yadav,
Vasundhara Mathur, Virendra Misra

A.
Labour
Law
-
Contract
Labour
(Regulation and Abolition) Act, 1970 -
Section 10(1) - Industrial Disputes Act,
62 INDIAN LAW REPORTS ALLAHABAD SERIES
1947 - Sections 2(a) & 39 - Industrial
dispute
- Reference to Tribunal for
adjudication - Competence of St. Govt. -
Appropriate
authority
concerning
to
Hindustan
Aeronautics
Ltd.
(HAL)
-
Whether Central Govt. or St. Govt. -
Holding of shares in the company -
Relevance - Held, the Central Government
is the appropriate Government in respect
to the industrial disputes concerning HAL,
which is a Government Company in which
more than 51% shares are held by the
Central
Government
-
The
Central
Government having delegated its powers
to the St. Government u/s 39 of the
Central Act, the St. Government is legally
authorized to exercise the delegated
power in respect of HAL. (Para 77 and 78)
B. Labour Law - Industrial Disputes Act,
1947 - Sections 7-A & 39 - UP Industrial
Dispute
Act,
1947
-Section
4-B
-
Industrial
dispute
-
Competence
of
Government
to
refer
the
dispute
-
Whether Central Govt. u/s 7-A of the
Central Act or St. Govt. u/s 4-B of the St.
Act - Held, if the Central Government can
refer a dispute to an Industrial Tribunal
constituted by the St. Government, the
same can also be done by the St.
Government
in
exercise
of
powers
delegated by the Central Government u/s
39 of the Central Act - St. Government has
the power to refer the dispute concerning
HAL to the Industrial Tribunal constituted
u/s 4-B of the St. Act. (Para 80 and 81)
C. Labour Law - Industrial Disputes Act,
1947 - Section 10(4) - Industrial dispute
- Reference - Competence of Tribunal to
decide reference which was not referred
to it - Held, Tribunal was required to
examine
the
question
whether
the
workmen in question can be treated as
employees of HAL keeping in view their
long continuous service - Finding returned
by the Industrial Tribunal, that the
contract between HAL and the canteen
contractor was sham, was beyond the
scope of reference and it has been
recorded without jurisdiction. (Para 84
and 87)
D. Labour Law - Industrial Disputes Act,
1947 - Section 2(k) - Industrial dispute -
Employer - Competence of Tribunal to
decide dispute, which is not 'industrial
dispute' - The employees were working in
canteen and they were not performing any
duties relating to the principal business of
HAL, i.e., manufacturing parts of aircrafts
- Effect - Held, unless HAL is found to be
the employer of the workmen in question,
the dispute between the workmen and
HAL is not an 'industrial dispute' within
the meaning of the expression used in the
Industrial Disputes Act and the Tribunal
has no jurisdiction to adjudicate upon the
dispute between HAL and the workmen -
Tribunal has no jurisdiction to examine
the validity of the contract between HAL
and the canteen contractor and to record
a finding that the contract is sham. (Para
98, 99 and 112)
E. Labour Law - Industrial dispute - Back
wages - Entitlement - Right of employee
to claim against HAL, who is the principal
employer - Enforceability - Held, back
wages
are
payable
only
when
the
employees are illegally restrained from
working, although they are willing to
perform their duties - The employees
were employed by the canteen contractor
and HAL was merely their principal
employer. Therefore, the employees had
no
right
to
claim
reinSt.ment
and
regularization in HAL and they having
declined to perform the duties assigned by
HAL, had no right to claim any back
wages. (Para 117 and 118)
F. Labour Law - Industrial Disputes Act,
1947 - Sections 25-K & 25-N - Industrial
dispute - Retrenchment - Establishment
having
less
than
100
employees
-
Applicability of Section 25-N - Held,
requirement for attracting Section 25-N is
that not less than one hundred workmen
were employed in the establishment on an
average per working day for the preceding
twelve months, which is not the case here.
Therefore, the provision of Section 25-N
will not apply to the present case. (Para
121)
11 All. Hindustan Aeronautics Ltd. Vs. Hindustan Aeronautics Karmchari Sabha & Ors.
63
Employer's Writ allowed and employee's
Writ dismissed. (E-1)
List of Cases cited:
1. Steel Authority of India Ltd. Vs U.O.I.; (2006)
12 SCC 233
2. ITC Limited & ors. Vs St. of Karn. & ors.;
(1995) Supp SCC 476
3. Bangalore Water Supply Vs A Rajappa & ors.;
(1978) 2 SCC 213
4. Bhavnagar University Vs Palitana Sugar Mill
Pvt. Ltd. &Ors; (2003) 2 SCC 111
5. J. N. Ganatra Vs Morvi Municipality; (1996) 9
SCC 495
6. TISCO Ltd. Vs St. of Jharkhand; (2014) 1 SCC
536
7. Air India Statutory Corp. Vs United Labour
Union; (1997) 9 SCC 377
8. Indian Petrochemicals Corp. Ltd. Vs Shramik
Sena; (1999) 6 SCC 439
9. Balvant Rai Saluja Vs Air India; (2014) 9 SCC
407
10. Writ C No. 1002796 of 2003; Hindustan
Aeronautics Ltd. Vs St. of U.P. & ors. decided on
01.04.2024
11. Gujarat Electricity Board Vs Hind Mazdoor
Sabha; (1995) 5 SCC 27
12. Deepali Gundu Surwase Vs Kranti Junior
Adhyapak Mahavidyalaya (D.ED.) & ors.; (2013)
10 SCC 324
13. Hindustan Aeronautics Ltd. Vs Hindustan
Aeronautical Canteen Kamgar Sangh; (2007) 15
SCC 51
14. Hindustan Aeronautics Ltd. Vs Workmen;
(1975) 4 SCC 679
15. Heavy Engineering Mazdoor Union Vs St. of
Bihar; (1969) 1 SCC 765
16. Hindustan Aeronautics Ltd. Vs Hindustan
Aeronautical Canteen Kamgar Sangh; (2007) 15
SCC 51
17. SAIL Vs National Union Waterfront Workers;
(2001) 7 SCC 1
18.
Nashik Workers Union Vs Hindustan
Aeronautics Ltd.; (2016) 6 SCC 224
19. International Airport Authority of India Vs
International Air Cargo Workers' Union: (2009)
13 SCC
20. BHEL Vs Mahendra Prasad Jakhmola; (2019)
13 SCC 82
21. Kirloskar Brothers Ltd. Vs Ramcharan;
(2023) 1 SCC 463
(Delivered by Hon'ble Subhash Vidyarthi, J.)

1. Writ C No. 1000315 of 2012 has
been filed by Hindustan Aeronautics Ltd.
(hereinafter referred to as "HAL") seeking
quashing of an award dated 09.08.2011
passed by the Presiding Officer, Industrial
Tribunal (II), U.P., Lucknow in Award
Case No. 52 of 2023, which has been
published on 20.10.2011. By means of
amendment, the petitioner has challenged
validity of the reference made by the State
Government on 22.07.2003 under Section
10(1)(d) of the Industrial Disputes Act,
1947 to the Industrial Tribunal (II),
Lucknow for adjudication of the following
questions:-

(i)
Whether
termination
of
services of 57 employees working in
canteen of HAL, Lucknow, by the
employer M/s Hindustan Aeronautics Ltd.,
Lucknow on 25.11.2000 and 23.12.2000, is
proper and legal? If not, to what relief the
employees are entitled.

(ii) Whether it would be proper
and legal to treat the workmen as
employees of HAL, Lucknow keeping in
view their long continuous service? If yes,
its effect.

2. WRIT - C No. - 1000491 of 2012
has been filed by Hindustan Aeronautics
Karmchari Sabha (hereinafter referred to as
"HAKS") challenging the validity of the
64 INDIAN LAW REPORTS ALLAHABAD SERIES
award dated 19.10.2011 passed by the
Industrial Tribunal to the extent it has
disallowed the claim for payment of back
wages for the period between retrenchment
and reinstatement of the workmen and
HAKS has sought a Writ of Mandamus
commanding HAL to pay the entire back
wages to the members / workmen for the
aforesaid period.

3. As both the Writ Petitions challenge
the same award and are based on the same
set of facts, these are being decided by this
common judgment.

4. Briefly stated, the facts pleaded in
Writ C No. 1000315 of 2012 are that HAL
is a Government Company registered under
Section 617 of the Companies Act, 1956
(which is similarly worded as Section 2(45)
of the Companies Act, 2013). It established
a factory at Lucknow in the year 1971-72
for manufacturing accessories of aircrafts.
A canteen was set up in the factory
premises for providing eatables to the
workmen at subsidized rates. The canteen
was being operated by a contractor, who
engaged workers to run the canteen.
Initially, the contract to run the canteen was
granted to one Sri. Chunni Lal Bhasin, who
engaged manpower for running the canteen
and paid wages to them. HAL reimbursed
the contractor for the wages paid to the
canteen employees.

5. On 24.04.1990, the Governor of
U.P., in consultation with U.P. State
Contract Labour Advisory Board, issued a
Notification
under
Section
10(1)
of
Contract
Labour
(Regulation
and
Abolition) Act, 1970 (hereinafter referred
to
as
"the
Contract
Labour
Act")
prohibiting employment of contract labour
in engineering industries situated in the
State,
except
M/s
Jay
Vijay
Metal
Industries, Varanasi and BHEL, Haridwar.
Vide
letter
dated
14.05.1990,
HAL
requested the U.P. Government for granting
exemption from the applicability of the
Contract Labour Act, in furtherance of
which, the State Government issued a
Notification dated 04.03.1991 whereby
HAL, Lucknow and its Units at Kanpur and
Korva (Sultanpur) were also included in the
Notification dated 24.04.1990, thereby
granting exemption to HAL from the
provisions of the Contract Labour Act.

6. HAL claims that in view of the
aforesaid exemption granted to it from the
provisions of the Contract Labour Act, it
was free to engage workers through
contractors and, accordingly, workers in the
canteen
were
also
engaged
by
the
contractor, who was given the contract to
operate the canteen at subsidized rates. The
contractors were free to engage persons of
their choice and HAL had no say in it.

7. Hindustan Aeronautics Karmchari
Sabha, Lucknow (hereinafter referred to as
"the HAKS") had submitted an application
to the Labour Commissioner, U.P., Kanpur
claiming that the persons working in
canteen should be paid wages equal to the
wages being paid to unskilled workmen
who
are
directly
employed
in
the
petitioner's factory. The aforesaid claim
was registered as Case No. 18 of 1985
under Contract Labour Act and it was
decided by means of an order dated
23.04.1989
wherein
the
Labour
Commissioner
held
that
the
persons
employed
through
contractor
do
not
perform the same duties as are performed
by the workmen directly employed in the
factory, but still they are entitled to wages
equivalent to the wages being paid to
unskilled laborers employed directly. Other
claims
regarding
changes
in
service
11 All. Hindustan Aeronautics Ltd. Vs. Hindustan Aeronautics Karmchari Sabha & Ors.
65
conditions were rejected. HAL challenged
the aforesaid order by filing Writ Petition
No. 4553 of 1989, which was dismissed by
means of a judgment and order dated
28.01.1994 passed by this Court. HAL
challenged the aforesaid order by filing
SLP No. 8768 of 1994, which too was
dismissed by means of an order dated
11.07.1994.

8. The dispute started when Hindustan
Aeronautics
Employees
Association,
Lucknow (HAEA) demanded that instead
of the facility of a subsidized canteen, HAL
employees
should
be
paid
canteen
allowance and this demand was accepted
by
HAL.
Thereafter
HAKS
started
opposing the grant of canteen allowance
and replacement of subsidized canteen by
market rate canteen.

9. On 22.06.2000 an agreement was
entered
into
between
Hindustan
Aeronautics
Employees
Association,
Lucknow (HAEA) and the Management of
HAL, Accessories Division, Lucknow
regarding revision of wage structure and
other demands, before the Assistant Labour
Commissioner wherein it was inter alia
agreed
that
the
establishment
would
discontinue the subsidized canteen facilities
and switch over to a system of payment of
Canteen Allowance. On 23.06.2000, the
General Secretary HAEA made a demand
for payment of canteen allowance in
pursuance
of
the
settlement
dated
22.06.2000.

10. On 25.11.2000, the contract between
HAL and the canteen operator Satish Sahni
for running a subsidized canteen was
terminated. On 27.11.2000 a fresh contract
for running the canteen at market rates was
entered into between HAL and the canteen
contractor Sri. Satish Sahni.

11. The contractor retained only 22
contract workers for running the canteen
under the new arrangement, under which the
food items were required to be sold at market
rates instead of subsidized rates.

12. On 25.11.2000 itself, HAL issued
notices to the employees of the canteen
contractor
whose
services
had
been
terminated and stating that as the contractor
did not fulfill his obligations, salary of the
employees for the period 01.11.2000 to
25.11.2000, one month's salary in lieu of the
notice, retrenchment allowance, gratuity and
other dues were paid to the workmen along
with the notice. However, the employees
declined to receive the notices and the
amounts.

13. HAL issued letters dated 25.11.2000
to the 63 canteen employees, whose services
had been terminated, stating that they were
being deployed on casual basis to perform
other duties in the HAL and they were
directed to report in the technical training
center at 09:00 a.m. on 27.11.2000.

14. The employees sent similarly
worded replies to the aforesaid letter, stating
that the order for their redeployment was
illegal, as they were regular employees of
HAL and not of the contractor.

15. Hindustan Aeronautics Karmchari
Sabha (HAKS) opposed the grant of canteen
allowance alleging that it was a plan to close
the canteen and it submitted a representation
dated 23.11.2000 to this effect.

16. On 09.12.2000, HAL issued letters
to all the concerned employees stating that
the subsidised canteen was being restored
as earlier and the employees should contact
the canteen contractor and start working in
the canteen. However, on the same date,
66 INDIAN LAW REPORTS ALLAHABAD SERIES
the canteen contactor sent a letter stating
that the office bearers of workers union had
obstructed the working of the canteen, had
turned all the persons out of the canteen
and had locked up its door. The lock was
opened on 11:45 hours but the canteen
contactor and his employees were not
permitted to enter the canteen. Hindustan
Aeronautics
Employees
Association
(HAEA) gave a letter dated 09.12.2000
demanding
resumption
of
canteen
allowance.

17. On 08/09.12.2000, a Manager of
HAL submitted a shift report stating that
some employees had tried to enter the
factory premises at about 01:45 a.m. on
09.12.2000. The gate was locked and they
were not allowed to enter the premises.
They wanted to search one Sri R.P. Singh,
who had reportedly scaled over the boundary
wall of the administrative building carrying
patrol in a jerry can in order to commit self
immolation. Thereupon, search parties were
sent all around the factory and Sri R.P. Singh
was found out. He was under influence of
liquor and was upset. He was sent home
around 04:15 a.m. with security.

18. HAKS boycotted the canteen and
demanded restoration of canteen allowance
and at the same time, insisted that the persons
employed by the canteen contractor should
not be retrenched.

19.
On
23.12.2000,
the
canteen
contractor issued a notice stating that the
contract between him and HAL had come to
an end and the services of all the persons
working in the canteen also stood terminated.
Dues of the employees were being paid by
HAL.

20. On 23.12.2000, HAL sent letters to
the canteen workers stating that the period
of canteen contract expired on 23.12.2000
and the services of the canteen workers
stood terminated. Arrears of salary, one
month's
salary
in
lieu
of
notice,
retrenchment allowance, gratuity and other
dues were paid to the employees along with
this notice. This information was sent to the
Government of India also through a letter
dated 23.12.2000.

21. Some employees challenged the
retrenchment notice by filing Writ Petition
No. 122 (S/S) of 2001, in which an interim
order dated 10.01.2001 was passed staying
operation of the retrenchment notice.
However, the writ petition was dismissed
by means of a judgment and order dated
30.10.2001 on the ground of availability of
alternative remedy under the Industrial
Disputes Act. Thereafter HAKS gave an
application
to
the
Deputy
Labour
Commissioner challenging termination of
services of canteen employees, which
resulted in a reference being made by the
State
Government
vide
order
dated
23.03.2003.

22. The reference was decided by the
Industrial Tribunal II, U.P., Lucknow by
means of the impugned award dated
09.08.2011 passed by the Presiding Officer,
Industrial Tribunal (II), U.P., Lucknow in
Award Case No. 52 of 2023, which has
been
published
on
20.10.2011.
The
Tribunal
has
held
that
the
canteen
employees had sought parity in wages with
the wages payable to unskilled workmen of
HAL, which was accepted by the deputy
Labour Commissioner, Kanpur and the
challenge to the aforesaid order made by
HAL remained unsuccessful up to the
Hon'ble Supreme Court. The contract
between HAL and the contractor contained
provisions beneficial to the workmen and it
also provided that in case the canteen
11 All. Hindustan Aeronautics Ltd. Vs. Hindustan Aeronautics Karmchari Sabha & Ors.
67
contractor fails to make any payment to the
workmen, HAL will pay the amount to
them and will recover the same from the
contractor. The contract also provided that
the contractor shall pay increments in
wages to the workmen in furtherance of
Government Orders and orders of Deputy
Labour
Commissioner
and
HAL
will
reimburse the contractor. The Tribunal
concluded that all the aforesaid facts establish
that in fact the 66 canteen workers, regarding
whom the reference was made, were the
employees of the principal employer - HAL
and the contract between HAL and the canteen
contractor was merely a paper agreement and
it was sham. The Tribunal declared the
retrenchment orders dated 25.11.2000 passed
in respect of 4 workmen and the retrenchment
orders dated 23.12.2000 passed in respect of
rest of them to be illegal.

23. The Tribunal further directed HAL to
pass
appropriate
orders
regarding
regularization of services of the workmen
within three months from the publication of
the award. However, the Tribunal rejected the
claim of payment of back wages on the ground
that there was no pleading that the workmen
remained unemployed during the relevant
period.

24. Submissions of Sri P.K. Sinha, the
learned Counsel for HAL and Sri Dhruv
Mathur and Sri Pranav Agarwal, the learned
counsel for HAKS, were heard on various
dates from 18.04.2024 till 06.05.2024 and the
judgment was reserved. The learned Counsel
for
HAL
had
filed
detailed
written
submissions before commencement of oral
submissions. The learned Counsel for HAKS
has filed a written brief of his submissions in
the month of October 2024.

25. Notices of both the Writ Petitions
were issued to the canteen contractor Sri.
Satish Sahni. The office has put up a report
in Writ C No. 1000491 of 2012 that the
notice was served, but he has not put in
appearance before this Court.

26. Sri P. K. Sinha, the learned
counsel for HAL submitted that the
reference order wrongly mentions HAL to
be the employer of the canteen workers. In
fact HAL is the principal employer of the
workmen of the canteen whereas their
employer is the canteen contractor. HAL is
authorised to engage contract workers vide
Notification dated 04.03.1991 and it is
registered under the Contract Labour Act.
He further submitted that HAL cannot be
treated as both an employer and a principal
employer in view of the judgment in the
case of Steel Authority of India Ltd. Vs.
Union of India: (2006) 12 SCC 233.

27. The learned counsel for HAL has
secondly submitted that after the judgment
in Steel Authority of India Ltd. (Supra), it
has been declared that the appropriate
government for HAL is the Central
Government. It is further submitted by him
that the Hon'ble Supreme Court in the case
of ITC Limited & Others vs. State of
Karnataka & Others: (1995) Supp SCC
476, has held that "once the Centre takes
over an industry under Entry 52 of List I
and passes an Act to regulate the
legislation, the State Legislature ceases to
have any jurisdiction to legislate in that
field and if it does so, that legislation would
be ultra vires the powers of the State
Legislature."

28. Further, placing reliance on the
judgment of the Apex Court in Bangalore
Water Supply vs. A Rajappa & Others:
(1978) 2 SCC 213, Sri. Sinha has submitted
that the employees and management of
manufacturing process are also covered
68 INDIAN LAW REPORTS ALLAHABAD SERIES
under the term industry and thus will also
be under control of the Central Government
and the State Government will have no
control at all since HAL is a "controlled
industry".

29. The third submission of the
learned counsel for HAL is that under U. P.
Industrial
Disputes
Act
(hereinafter
referred to as 'the State Act'), the industrial
disputes of the workmen and the employer
regarding any industry carried on by or
under authority of the Central Government
or by a Railway Company or such
controlled industry as may be specified in
this behalf by the Central Government, are
excluded from the purview of consideration
of industrial disputes by the Industrial
Tribunal created under Section 4-B of the
State Act. As such, the industrial disputes
in regard to the workmen of an industry
specified as a 'controlled industry' under
Schedule I of Industries (Development and
Regulation) Act, 1951 and Section 2 (ee) of
Industrial Disputes Act, 1947, cannot be
adjudicated by a Tribunal created under
Section 4-B of the State Act, 1947 until and
unless a specific amendment is made in the
State Act empowering the Tribunals to
adjudicate
the
industrial
disputes
of
industries carried on by or under authority
of the Central Government and the
reference to the U.P. Industrial Tribunal
was incompetent.

30. The learned counsel for HAL has
further submitted that the appropriate
government can refer the industrial disputes
by exercise of power under Section
10(1)(d) or under the third Proviso
appended
to
Section
10(1)(d).
The
consequence of exercising power under
both the provisions is altogether different.
Under Section 10(1)(d) the industrial
disputes have to be referred necessarily to
Central Government Industrial Tribunal
(CGIT) constituted under Section 7-A of
the Central Act for the reason that word
'Tribunal' as mentioned in Section 10(1)(d)
refers to the Tribunals constituted under
Section 7-A of the Central Act. On the
other
hand,
once
the
appropriate
government elects to exercise power under
the third Proviso appended to Section
10(1)(d), the 'Tribunal' defined in third
proviso is a 'Tribunal' constituted by the
State Government which is altogether a
different Tribunal manned by different
Presiding Officer (P.O.) appointed by the
State Government. As such, the reference
of U.P. Industrial Tribunal is bad.

31. Relying upon the decisions in the
cases of Bhavnagar University versus
Palitana Sugar Mill Pvt. Ltd. &Ors:
(2003) 2 SCC 111 and J. N. Ganatra
versus Morvi Municipality: (1996) 9 SCC
495, the learned Counsel for HAL has
submitted that once the authority chooses
to exercise power under any specific
provision, the power should be exercised in
the manner as provided in the statute and in
no other manner.

32. Fifthly, the learned counsel has
submitted that the terms of reference order
on its close reading clearly reveal that it has
taken away HAL's status of 'Principal
Employer' under The Contract Labour Act,
1970 and the Rules framed there under
without giving an opportunity to HAL to
challenge the change of its status from
'Principal Employer' to 'Employer' and, as
such, the reference is illegal and liable to be
set aside. Further, the Hon'ble Supreme
Court in Steel Authority of India Ltd.
(Supra) has held that the Contract Labour
Act, 1970 is a complete Code in itself and
the relationship between the employer and
employees is essentially a question of fact,
11 All. Hindustan Aeronautics Ltd. Vs. Hindustan Aeronautics Karmchari Sabha & Ors.
69
determination of which is under the
exclusive
domain
of
the
appropriate
government and not the labour court or the
writ court. The Hon'ble Supreme Court has
held that if a relief of absorption is claimed,
the workman shall necessarily approach the
Industrial Tribunal and establish that
contract is sham, ruse & camouflage. Thus,
for adjudicating upon the issue regarding
the validity of contract whether the same is
sham or not, a reference has to be
necessarily drawn by the appropriate
government for referring the matter for
adjudication under Section 10(1) (d) of the
Central Act which has not been done in the
case at hand.

33. Sri. Sinha has submitted that the
adjudication of the contract between HAL
and the canteen contractor being sham has
been made by the Tribunal without any
reference and it is in violation of law laid
down by the Hon'ble Supreme Court in
TISCO Limited vs. State of Jharkhand:
(2014) 1 SCC 536 wherein the Apex Court
held that the Tribunal acquires jurisdiction
only on the basis of a reference made to it
and the Tribunal has to confine itself within
the subject matter of reference.

34. The learned Counsel for HAL has
also submitted that no fresh notice was
issued after changing the reference from
Section 4(k) of the State Act to Section
10(1)(d) of
the
Central
Act,
rather
proceedings were continued in pursuance
of the Notice issued under Section 4(k) of
the State Act which culminated into the
Award and thus the entire adjudication of
Reference under Section 10(1)(d) of the
Central
Act
is
illegal
and
without
jurisdiction. He has submitted that even if
the power under Section 39 of Central Act
has been delegated to be exercised by the
Government of U.P., after Air India
Statutory Corpn. v. United Labour
Union: (1997) 9 SCC 377, a notice under
Section 10(1)(d) of the Central Act ought to
have been issued for conducting the
proceedings of adjudication under the
Central Act.

35. The learned counsel for HAL has
also contended that the impugned Award
arbitrarily creates difference between the
appropriate governments before and after
the year 1986 when the amendment in the
definition of appropriate government under
the Contract Labour Act was made. He has
submitted that so far as HAL is concerned,
the Central Government has always been
the 'appropriate government' before or
even after the said amendment in the
definition of appropriate government in the
Contract Labour Act. He has placed
reliance on the judgment of the Hon'ble
Supreme Court in Civil Appeal No. 3639 of
2002 where it has categorically been held
that HAL is an undertaking of Central
Government and it is only the Central
Government which exercises control over
the same.

36. Learned counsel for HAL has
invited this Court's attention to sub-para-
VI of the contract where although it is
written that the contractor will be the
employer of the workers working in the
canteen yet in the same para, it has also
been written that until the contractor files
its own standing order, the standing orders
of HAL shall apply to the contract
workmen and the contractor will have to
work in accordance with the Model
Standing Order. He has submitted that the
Model Standing Order as mentioned in
Clause-VI of the contract, meant the model
standing order under Standing Order 1946
and not the company's certified standing
order. He has submitted that the finding of
70 INDIAN LAW REPORTS ALLAHABAD SERIES
the Tribunal that the Contract Labours were
in fact employees of petitioner and
contractor was only a device to avoid
statutory liabilities, is wrong.

37. The next contention on behalf of
learned counsel for HAL is that the
provision
of
payment
of
Employees
Provident Fund (EPF) under Employees'
Provident
Funds
and
Miscellaneous
Provisions Act, 1952 (hereinafter referred
to as EPF Act, 1952) and Employees' State
Insurance Act, 1948 (hereinafter referred to
as ESI Act, 1948) has been included in
terms of the contract since it is a statutory
requirement in terms of Section 21 of the
Contract Labour Act. Under this Section, it
is responsibility of the 'principal employer' to
ensure that the workmen are being afforded
all the benefits of the statutory enactments.
Where the contractor does not pay his
workmen in compliance with the provision of
Section 21(4) of the Contract Labour Act, it
becomes the responsibility of the principal
employer to pay the same to the contract
workmen and thereafter deduct the same
amount from the bills of the contractor. Such
payment made by the principal employer to
the contract workmen does not create any
relationship of employer and employee
between the HAL and the contract workmen.
In regard to the filing of P.F. and E.S.I. in
HAL Code, the learned Counsel for HAL has
submitted that the P.F. and E.S.I. were being
deposited by the contractor and HAL only
used to countersign the deposit vouchers to
ensure that the contractor was making the
statutory deposits in respect of the Contract
Labours under Section 21(4) of the Contract
Labour Act. Such deposition does not
establish any relationship of master and
servant between the parties.

38. In regard to the finding of the
Tribunal pertaining to engagement of the
workmen by a new contractor after every
term of contract comes to an end by giving
them new appointment letters, the learned
counsel for HAL has submitted that the
appointment letters were issued by the
canteen
contractor
without
any
involvement of HAL.

39. In regard to the finding recorded
by the Industrial Tribunal that every
workman ought to have been given
retrenchment compensation, the learned
counsel has submitted that the obligation
was of the contractor and not of HAL. The
contract
workmen
of
the
erstwhile
contractors never raised any claim for
retrenchment compensation & gratuity
from the outgoing contractor. However,
when the subsidized canteen was abolished
and the contractor requested HAL to pay
his entire liability, HAL discharged the said
liability on behalf of the contractor by
using the 'retention money' of the erstwhile
contractors. HAL has not paid the amount
as employer of the contract employees and
it has discharged the obligation as the
principal employer. In the retrenchment
notice it had been specifically averred that
HAL was making such payments because
the contractor had not discharged its
obligations.

40. The learned Counsel for HAL has
submitted
that
after
substitution
of
subsidized canteen by a market rate
canteen, the canteen business was reduced
drastically and the canteen contractor
decided to retain only 22 employees. HAL
offered employed to the remaining canteen
employees on compassionate basis, but this
offer was not accepted by those employees.
The offer of redeployment cannot be
treated as creating the relationship of
master and servant between HAL and the
canteen employees.
11 All. Hindustan Aeronautics Ltd. Vs. Hindustan Aeronautics Karmchari Sabha & Ors.
71

41. The learned counsel for HAL has
submitted that HAL did not make payment
of wages to the canteen employees. As per
the terms of the contract, HAL used to pay
subsidy amount against the bills of the
contractor. The determination made in
Award
passed
by
the
U.P.
Labour
Commissioner under Rule 25(2) (5) (b) of
the Contract Labour Rules, 1975 is only a
computation of what wages had to be paid
to
the
Contract
Labours.
In
the
aforementioned award the contractor was
also a party and HAL was made party as a
'Principal Employer'. This was done so
that in case of failure of the contractor to
pay such wages, liability to pay the same
may be fastened on to HAL under Section
21 of The Contract Labour Act, 1970.
Therefore, in accordance with the award,
the contractor had to pay the wages to his
labours which has to be ensured under
Section 21(4) of the Contract Labour Act
by HAL and thus, the said determination of
U.P. Labour Commissioner in the award
passed by him does in no manner create
relationship of master and servant between
HAL and the canteen employees.

42. The learned counsel for HAL has
further submitted that the new contractor
often engaged the employees of old
contractor who were well acquainted with
their work, but this was in the contractor's
discretion and HAL had never directed the
contractor to engage any specific workmen
of the erstwhile contractor.

43. Relying upon the judgment in the
case of Indian Petrochemicals Corpn.
Ltd. v. Shramik Sena: (1999) 6 SCC 439
and Balvant Rai Saluja vs. Air India:
(2014) 9 SCC 407, the learned Counsel for
HAL has submitted that the contract
workmen of the statutory canteen are
entitled to get benefit under Factories Act
only and not for all other purpose under
Industrial Disputes Act. The Contract
Labours working in statutory canteen have
to be treated only as employees of the
canteen and would get benefits under
Factories Act, 1948 only so long as the
canteen is in operation but when the
canteen was changed from a subsidized
canteen to market rate canteen and the
work-load was been reduced significantly,
retrenchment of the canteen employees was
the only viable option left for the canteen
contractor and HAL has only paid dues to
them on the instructions in writing given by
the contractor.

44. The learned counsel for HAL has
further submitted that the management was
made to change the system of subsidized
canteen to market rate canteen in view of
the pressing demand of the employees of
HAL and as a consequence thereto, a
tripartite settlement was arrived at in which
in place of subsidized canteen, the
management agreed to pay 'Canteen
Allowance' to the members of HAEA and
to run the canteen at market rates. The said
settlement was made by accepting the long
standing demands of HAEA, as it was
apprehended that if the demand was not
accepted, industrial unrest could have
escalated.

45. Per contra, Sri Dhruv Mathur, the
learned counsel for the respondent -
Hindustan Aeronautics Karmchari Sabha
(HAKS), has submitted that the State
Industrial Tribunal has jurisdiction to
adjudicate on the dispute in question since
the third proviso to Section 10 of the
Central Act provides that "where the
dispute in relation to which the Central
Government
is
the
appropriate
Government, it shall be competent for that
Government to refer the dispute to a
72 INDIAN LAW REPORTS ALLAHABAD SERIES
Labour Court or an Industrial Tribunal, as
the case may be, constituted by the State
Government". The dispute in question was
referred to Industrial Tribunal constituted
by the State Government in exercise of
discretion vested in the Government by the
third Proviso to Section 10 of the Central
Act.

46. Learned Counsel for HAKS
further submitted that even otherwise, the
Industrial Tribunal that has passed the
impugned award has been constituted by
the State Govt. under Section 7-A of the
Industrial Disputes Act, 1947 (the Central
Act), as is evident from the information
received from the office of the Industrial
Tribunal, Lucknow under the Right to
Information Act, 2005. In this regard, he
has placed reliance on a judgment dated
01.04.2024 passed by a coordinate bench of
this Court in Writ C No. 1002796/2003 and
connected Writ C No. 1001632/2015 titled
Hindustan Aeronautics Ltd. Versus State
of U. P. & Others, in which this Court has
held that all Tribunals constituted by the
State Govt., including the Tribunal in
question, are functioning in terms of
Section 7-A of the Central Act. In view of
the aforesaid law, the submission of HAL
that the reference of the industrial dispute
in question could not have been made to a
Tribunal
constituted
by
the
State
Government, is misconceived and deserves
to be rejected.

47. The learned counsel for HAKS
further submitted that where the Central
Government is the appropriate government,
Section 39 of the Central Act empowers it
to delegate its powers to the State
Government. In exercise of this power, the
Central Government has delegated its
powers to the State Governments vide
Notification dated 03.07.1998 in relation to
the undertakings, cooperation autonomous
bodies
running
under
the
Central
Government which were specified in the
Schedule annexed with the Notification
dated 03.07.1998. In the schedule of the
said Notification the name of HAL is
placed at serial no.40. Therefore, the State
Government is exercising such delegated
power in respect of HAL and accordingly,
it has made the reference under Section
10(1)(d) of the Industrial Disputes Act
1947 to the Industrial Tribunal constituted
by it.

48. The next submission made by the
learned counsel for HAKS is that the
mention of Section 4 (k) in the notice dated
08.08.2003 is merely a typographical error
as the said notice also clearly mentions that
it has been issued in furtherance of Letter
No. 849-54 which clearly indicates that the
proceedings were initiated in furtherance of
Section 10 of the Central Act.

49. Sri.